Federal regulators have ordered cryptocurrency brokerage Voyager Digital to cease telling prospects that their deposits are protected against losses by the Federal Deposit Insurance coverage Company as a result of that is not true, based on letters from regulators despatched this week.
Voyager has talked about its federally insured standing on its web site, cell app and social media accounts.
"Your USD is held by our banking accomplice, Metropolitan Industrial Financial institution, which is FDIC insured, so the money you maintain with Voyager is protected," Voyager's web site stated Friday, claiming deposits are "FDIC insured on USD $250,000."
However these claims "are false and deceptive," officers from the FDIC and the Federal Reserve stated in a letter to Voyager Thursday. The officers demanded that the corporate scrub these claims from its web site and social media, and provides written affirmation by Monday that they've finished so.
Voyager's claims "probably misled and have been relied upon by prospects who positioned their funds with Voyager and wouldn't have instant entry to their funds," the letter stated.
Voyager suspended all exercise earlier this month and filed for Chapter 11 chapter a couple of days later, leaving prospects with out entry to their funds. Voyager stated in courtroom paperwork that it has been damage by "extended volatility and contagion" within the cryptocurrency market. It entered chapter proceedings with about $110 million in money, courtroom paperwork state.
The corporate didn't instantly reply to a request for remark from CBS MoneyWatch on the FDIC letter.
The FDIC is a authorities company tasked with guarding the general public's financial institution accounts — reminiscent of checking, financial savings and CDs — in opposition to unexpected losses. Having a FDIC insured account implies that anybody who has up $250,000 deposited right into a financial institution would have their cash reimbursed if the financial institution unexpectedly fails. Nevertheless, speculative investments reminiscent of shares and cryptocurrencies sometimes aren't FDIC insured.
Earlier this month, the FDIC advised Bloomberg Information that it was probing the way in which Voyager was advertising and marketing itself to prospects.
FDIC officers stated Voyager is violating the Federal Deposit Insurance coverage Act, which prohibits anybody from implying that deposits are insured after they're not. Voyager Digital has a checking account with Metropolitan Industrial Financial institution of New York and that account is insured, the FDIC stated, however prospects opening and utilizing accounts on the Voyager Digital platform aren't insured.
Based in 2018, Voyager permits traders to commerce greater than 100 completely different crypto property through a cell app.
Voyager is certainly one of a number of crypto-focused firms which were hammered by the market's collapse. Celsius Community filed for chapter safety this month after a crypto crash that decimated the worth of digital currencies together with bitcoin and ethereum. Cryptocurrency lender Vauld of Singapore additionally filed for chapter this month.