U.S. Fed warns crypto firm on deposit insurance claims

U.S. banking regulators ordered Voyager Digital LLC to stop making false statements about its access to federal deposit insurance.

In a joint letter, the U.S. Federal Deposit Insurance Corp. (FDIC) — along with the board of governors of the U.S. Federal Reserve — demanded that the bankrupt crypto brokerage firm “cease and desist from making false and misleading statements” about its FDIC coverage.

According to FDIC and the Fed, Voyager Digital (along with certain officers and employees of the company) have made statements online indicating the company is FDIC insured, that customers are insured against the firm’s failure, and that customer deposits with the crypto firm are insured.

“These representations are false and misleading,” the agencies said. “Based on the information gathered to date, it appears that these 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 agencies refer to statements they say were posted to Voyager Digital’s website, mobile app and social media accounts.

In addition to ordering the firm to stop making misleading statements, it also called for “immediate action” to correct prior statements.

Among other things, the agencies noted that Voyager itself is not insured by the FDIC, and that “customers who invested through its cryptocurrency platform would not receive insurance coverage in the event of Voyager’s failure.”

Voyager, which was listed on the Toronto Stock Exchange (TSX), filed in the U.S. for bankruptcy protection earlier this month. It then voluntarily delisted from the TSX and began trading on the OTC Pink Sheets.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.