US banking regulators have ordered crypto firm Voyager Digital to try and stop making “false and misleading” claims that its customers’ funds are protected by the government.
The Federal Reserve and the Federal Deposit Insurance Corp (FDIC) sent a letter to the firm on Thursday, saying they believed Voyager customers would be covered by the FDIC by claiming their funds with the company.
A company spokesperson did not immediately respond to a request for comment.
The company, which declared bankruptcy earlier this month, and its executives indicated in various statements that Voyager itself was FDIC-insured, that customers who would invest in its cryptocurrency platform would have their funds insured, regulators said. And the FDIC will insure customers against Voyager’s failure only.
In fact, the company had only one deposit account with Metropolitan Commercial Bank, and customers who invested through the company’s platform had no FDIC insurance, the regulators said.
The regulators said in a joint statement, “Based on the information collected to date, it appears that these representations were misguided and relied upon by customers who held their funds with Voyager and had access to their funds.” There was no immediate access.”
In a letter sent to company executives, the regulator ordered the company to remove all misleading statements within two business days of receiving the letter. Regulators said such action would not deter agencies from taking further action against the firm in future.
Voyager was one of several crypto firms struggling in the wake of the turmoil in the wider crypto market. In its Chapter 11 bankruptcy filing earlier this month, Voyager estimated it had more than 100,000 creditors and between $1 billion and $10 billion in assets, as well as liabilities of similar value.