US Regulators Warn Voyager for Making False Claims of FIDC Protection

Friday, 29/07/2022 | 06:53 GMT by Arnab Shome
  • The company claims that its customer deposits are protected under FIDC insurance.
  • The crypto company filed for Chapter 11 bankruptcy earlier this month.
bankruptcy

Voyager Digital, which is in the liquidation process, is making false and misleading claims that its customer funds are insured by the US government, the Federal Reserve and the Federal Deposit Insurance Corporation (FIDC) clarified on Thursday.

The US regulators issued a cease and desist order against the crypto company and even asked it to take immediate corrective measures to address the false and misleading statements.

The regulators highlighted that Voyager suggested that it is FIDC-insured and the funds of the customers who invested with Voyager would receive FIDC coverage. The company even claimed that the funds are safe even against the failure of Voyager itself.

The company made these claims on various platforms including its website, mobile app and social media accounts.

“These representations are false and misleading and based on the information we have to date it appears that the representations likely misled and were relied upon by customers who placed their funds with Voyager and do not have immediate access to their funds,” the regulators said.

The statement, jointly signed by the Assistant General Counsel of Enforcement at both the regulators, asked Voyager to submit a written confirmation if it believes that the claims are true. Additionally, the company has to submit a full list of claims it made regarding deposit insurance along with documentation to support their accuracy.

A Doomed Crypto Company

Voyager filed for Chapter 11 bankruptcy earlier this month as the company was reeling from its credit exposure to Singapore-based Three Arrows Capital, a collapsed crypto-focused hedge fund.

Recently, the company received a joint accusation offer from Sam Bankman-Fried’s FTX and Alameda. However, the lawyers of Voyager called it a “low-ball bid dressed up as a white knight rescue.” In response, Bankman-Fried questioned the intention of the bankruptcy agent and highlighted that the usual liquidation process is too long and cost-intensive, slowly draining customer funds.

Voyager Digital, which is in the liquidation process, is making false and misleading claims that its customer funds are insured by the US government, the Federal Reserve and the Federal Deposit Insurance Corporation (FIDC) clarified on Thursday.

The US regulators issued a cease and desist order against the crypto company and even asked it to take immediate corrective measures to address the false and misleading statements.

The regulators highlighted that Voyager suggested that it is FIDC-insured and the funds of the customers who invested with Voyager would receive FIDC coverage. The company even claimed that the funds are safe even against the failure of Voyager itself.

The company made these claims on various platforms including its website, mobile app and social media accounts.

“These representations are false and misleading and based on the information we have to date it appears that the representations likely misled and were relied upon by customers who placed their funds with Voyager and do not have immediate access to their funds,” the regulators said.

The statement, jointly signed by the Assistant General Counsel of Enforcement at both the regulators, asked Voyager to submit a written confirmation if it believes that the claims are true. Additionally, the company has to submit a full list of claims it made regarding deposit insurance along with documentation to support their accuracy.

A Doomed Crypto Company

Voyager filed for Chapter 11 bankruptcy earlier this month as the company was reeling from its credit exposure to Singapore-based Three Arrows Capital, a collapsed crypto-focused hedge fund.

Recently, the company received a joint accusation offer from Sam Bankman-Fried’s FTX and Alameda. However, the lawyers of Voyager called it a “low-ball bid dressed up as a white knight rescue.” In response, Bankman-Fried questioned the intention of the bankruptcy agent and highlighted that the usual liquidation process is too long and cost-intensive, slowly draining customer funds.

About the Author: Arnab Shome
Arnab Shome
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About the Author: Arnab Shome
Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.
  • 6404 Articles
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