Voyager Again in Trouble As FDIC Issued an Advisory to Banks
Crypto entities don’t cowl by FDIC insurance.
The U.S. Federal Deposit Insurance Corporation has issued a broad warning to bankers to maintain control of their cryptocurrency partners. They have also demanded Voyager Digital retract its assertions that consumers’ cash would receive government protection.
This week, the FDIC and Federal Reserve accused Voyager CEO Stephen Ehrlich of deceiving consumers about the safeguards on their assets by stating that they would be protected by deposit insurance in the case of Voyager’s failure.
The Voyager customers are currently fighting to get their money back while the business navigates bankruptcy.
Deposit products offered by insured banks, such as checking and savings accounts, are covered by the FDIC deposit insurance. However, stocks, bonds, money market mutual funds, securities, commodities, and digital assets are examples of non-deposit items that are not covered by insurance, as clarified by the Corporation.
The Ongoing Dispute
The US regulators previously issued an order to ailing crypto lender Voyager, ordering it to stop misrepresenting to its clients that their funds were insured by the FDIC and protected by the US government just because it held accounts at Metropolitan Commercial Bank in New York.
On Thursday, the FDIC and FED released the following statements to clarify:
Voyager has made a number of claims on the internet through its website, mobile app, and social media accounts, claiming or implying that:
(1) The very first claim which went against Voyager is FDIC-insured
(2) Customers who invested with the Voyager cryptocurrency platform would receive FDIC insurance coverage for all funds provided to, held by, on, or with Voyager
(3) The FDIC would protect customers in the event that Voyager fails
By doing so, the Corporation has provided valuable information to Voyager’s customers on who is really responsible for resolving the crisis. Further developments are awaited.
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