Last Updated on 20 mins by cryptoevent

Voyager Digital recently filed for bankruptcy after halting payouts from the platform. Banking regulators in the United States have now ordered the cryptocurrency exchange not to make “false and misleading” claims that the government has protected customer funds.

Voyager receives a warning from US regulators

On Thursday, the Federal Reserve and the Federal Deposit Insurance Corp (FDIC) sent one Letter to Voyager, saying that the organization had made false claims to its customers that their funds were insured by the FDIC.

Regulators added that the company and its executives had made multiple statements in the past alleging that the FDIC had insured their funds. It claimed that users who deposited fiat and cryptocurrencies on the platform were insured and that the FDIC would insure users against the exchange going down.

However, contrary to their claims, Voyager only had a deposit account with the Metropolitan Commercial Bank. Additionally, clients investing through the company’s platform did not have FDIC insurance.

The FDIC and the Federal Reserve issued a joint statement, judging by the information gathered so far; it appears that the representations made were misleading. Customers used the claims to show their trust in Voyager by depositing money. However, these users now lacked access to their funds.

Company executives sent a letter asking the company to stop all misleading claims within two business days of receiving the letter. Regulators added that these changes would not prevent authorities from taking further action against the company.

Bankruptcy of Voyager

Voyager was one of the largest cryptocurrency exchanges, supporting Bitcoin and many other low-cap cryptos. However, it has struggled after the ongoing crypto winter that has affected many cryptocurrency companies.

Before its collapse, Voyager had over 100,000 creditors, between $1 billion and $10 billion in assets and another $10 billion in liabilities. Earlier this month, Voyager defaulted on Three Arrows Capital for failing to repay a $680 million loan. 3AC’s failure to repay the loan caused a liquidity crisis for Voyager, which was forced to stop disbursing and later declared bankruptcy.

In June, Voyager signed a revolving credit line with Alameda, a trading company founded by Sam Bankman-Fried. The bankruptcy filing also revealed that Alameda was Voyager’s largest single loan, with $75 million in unsecured loans.

Recently, FTX Voyager proposed a deal where Voyager customers would create an account with FTX. User account balances would reflect funds equal to their bankruptcy claims. However, Voyager turned down the deal, saying it would harm its customers.

Related

• Voyager Digital claims to protect its users’ wealth while exploring “strategic alternatives.”
• Voyager Digital Withdrawal Limits Casters for Crypto Platform – Sell VGX?
• Voyager Digital defaults on 3AC

The post, “Voyager Ordered by Regulators to Stop Claiming FDIC Insured,” appeared first in Business 2 Community.

https%3A%2F%2Fwww.business2community.com%2Fcrypto-news%2Fvoyager-instructed-by-regulators-to-stop-claiming-it-is-fdic-insured-02529754