Two federal banking agencies are “demanding” that a New Jersey crypto currency brokerage firm stop immediately making bogus claims about coverage by federal deposit insurance of its products, the agencies said in a release late Thursday.
The Federal Deposit Insurance Corp. (FDIC) and the Federal Reserve made the demand in a joint letter to Voyager Digital, a Jersey City, N.J., firm that the agencies say is a crypto brokerage firm.
According to the agencies, the firm – and certain of its officers and employees – has made “various statements online, including on its website, mobile app, and social media accounts, stating or suggesting” that: the firm is FDIC-insured; customers who invest with the firm’s cryptocurrency platform would receive FDIC insurance coverage for all funds provided to, and held by, Voyager, without reference to the insured depository institution account; and that the FDIC would insure customers against the failure of Voyager itself.
“These representations are false and misleading,” the banking agencies wrote. “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 said that the Federal Deposit Insurance Act prohibits any person from “representing or implying that an uninsured deposit is insured or from knowingly misrepresenting the extent and manner in which a deposit liability, obligation, certificate, or share is insured under that Act. The FDIC is authorized to enforce this prohibition against any person.”
In their letter, the agencies specifically demanded that Voyager take the actions of:
- Immediately removing any and all statements, representations, or references that suggest in any way, expressly or implicitly, that (1) Voyager is insured by the FDIC; (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, without reference to the insured depository institution account; or (3) the FDIC would insure customers against the failure of Voyager itself, from Voyager’s websites (including any pop-up, hyperlink, or chat-bot disclosures), Twitter and other social media accounts (including corporate and Voyager senior management’s personal accounts), mobile app, online outlets, and all forms (electronic and hard copy) of marketing, advertising, or consumer-facing materials and communications;
- Providing written confirmation that the firm has fully complied with the agencies’ requests. Such confirmation shall, the agencies said, detail the efforts that Voyager took to comply with the letter, including all steps undertaken by Voyager to identify and locate all such misrepresentations, and the scope of Voyager’s removal of the misrepresentations from its website, mobile app, Twitter accounts, and any other marketing, advertising, and consumer-facing materials and communications.
The FDIC and Fed noted that a prompt response from the firm to the demands “does not preclude us from taking any further action, as appropriate, with respect to the foregoing or any other violations of law or regulation, or unsafe or unsound banking practice.”
Voyager holds deposit accounts at Metropolitan Commercial Bank (MCB) of New York, N.Y., the agencies noted, “for the benefit of persons who make U.S. dollar deposits in their accounts at Voyager (for-benefit-of accounts or ‘FBO Accounts’).” The bank’s deposits are insured by the FDIC; the Fed is the bank’s primary federal regulator. Under a service agreement, the agencies said, Voyager performs certain services on behalf of MCB related to the FBO accounts.