Earlier this month, the Federal Reserve and the Federal Deposit Insurance Corp (FDIC) notified Voyager Digital to stop misleading its customers. As per FDIC, Voyager’s claims of their funds being covered by FDIC are false.
US banking regulators have issued a cease-and-desist order to cryptocurrency company Voyager Digital for making “false and misleading” representations about the government’s protection of its customers’ cash. Representatives of Voyager Digital refused to make any comment on the situation.
Background
In the wake of widespread cryptocurrency adoption, Voyager was one of many crypto companies that struggled. According to regulators, the company had declared bankruptcy earlier and made several statements saying the Voyager was FDIC-insured. Voyager also noted that those who invested on their platform would have their funds secured by the FDIC.
FDIC issues broader warnings
Following the warning letter issued to Voyager Digital, the Federal Deposit Insurance Corporation has issued broader warnings and guidelines to regulate crypto partners. While the FDIC maintains an insurance fund to pay back depositors if their banks fail, such protection does not extend to failing crypto firms using such banks. The banks may be exposed to legal risks if their crypto partners make misrepresentations about the nature and scope of insurance.
Voyager Digital maintained accounts with the New York Metropolitan Commercial Bank, which is also FDIC-insured, but only in the event of Metropolitan’s insolvency, not Voyager. The FDIC is now cautioning banks, like Metropolitan, that it is their responsibility to monitor any potential claims made by their business partners.
