State regulators enhance their scrutiny of Voyager and started digging deeper into past dealings of the failing exchange so let’s read more today in our latest cryptocurrency news.
The Securities regulators in Alabama and Texas announced that they are expanding their investigations into Voyager after some new information emerged from the collapsing platform. The director of enforcement at the Texas State Securities Board Joe Rotunda added:
“What we’re seeing now is that a lot of these crypto-lending firms may not have fully disclosed what they were doing on the backside with investors’ money. The risks associated with those types of lending practices, or even the other types of transactions they are engaging in.”
Voyagers, today we began a voluntary financial restructuring process to protect assets on the platform, maximize value for all stakeholders, especially customers, and emerge as a stronger company. Voyager will continue operating throughout.https://t.co/TxlO4eua8E
— Stephen Ehrlich (@Ehrls15) July 6, 2022
The news service reported that the state officials are examining whether Voyager disclosed the right information on its loans and how it handled the credits of the borrowers. The state regulators enhance their scrutiny on Voyager and they opened investigations in multiple countries after the company froze customer withdrawals last month. Voyager filed for Chapter 11 bankruptcy protection which caused the company’s stock to crash by 12%. The following day, the trading of the stock was halted on the Toronto Stock Exchange after the price dropped by 26%.
Not even the $500 million bailouts by Sam Bankman Fried could slow down the implosion at Voyager. The company’s bankruptcy filing revealed that the platform owed Voyager $377 million and according to regulators, they awere investigating the yield product offering at voyager and Celsius including whether they are unregistered securities. Both crypto companies as higher rates of return like 12% and 17%. Both companies are promoting the rates on their websites. The Chief deputy director at Alabama Securities Commission Amanda Senn noted:
“We are investigating these companies and trying to figure out what happened and why. We are making inquiries. It’s still the initial stages, but we have a responsibility on behalf of our investors in our states.”
As recently reported, The Federal Deposit Insurance Corporation – FDIC is probing Voyager Digital for deceiving users. The FDIC is a consumer protection agency that ensures user deposits, oversees financial institutions like banks, and protects investors in case of bank failure. Voyager Digital is a Toronto-based company that marketed all depositors in the company as being covered by the FDIC insurance via its partnership with Metropolitan Commercial Bank as its partner. In simple terms, they could have sold VOyager as an FDIC insured.