The US Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) are accusing crypto brokerage firm Voyager Digital of falsely representing its deposit insurance status.
In a joint letter, the two regulators Voyager violated section 18(a)(4) of the Federal Deposit Insurance Act.
“Section 18(a)(4) of the Federal Deposit Insurance Act (‘FDI Act’), 12 U.S.C. § 1828(a)(4), prohibits any person from representing or implying that an uninsured deposit is insured or from knowingly misrepresenting the extent and manner in which a deposit liability, obligation, certificate, or share is insured under the FDI Act.”
The agencies say Voyager, its officers and employees made various misleading statements claiming or suggesting that the company is FDIC-insured, that Voyager platform users would receive FDIC insurance coverage for funds that were provided to or in the custody of the crypto firm, and that customers have FDIC insurance against the failure of Voyager itself.
The Fed and the FDIC deny these claims. They clarify that Voyager maintains deposit accounts at the Metropolitan Commercial Bank in New York for the benefit of its clients and it is this depository institution that has deposits insured by the FDIC.
The regulators ordered Voyager to cease and desist from making false representations and to take corrective actions.
“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 accusations come as Voyager faces insolvency. The crypto firm filed for bankruptcy in early July after one of its biggest borrowers, crypto hedge fund Three Arrows Capital (3AC), defaulted on a $650 million loan.
