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6 US State Regulators crack down on Voyager Digital over interest-bearing accounts

More than half a dozen US state regulators have taken down another crypto lender. This time around, Voyager Digital is being accused of securities regulation violations on its interest-bearing accounts, just over a month since BlockFi paid $100 million to the Securities and Exchange Commission (SEC) for similar fees.

Voyager Digital, whose parent company is publicly listed in Canada, is being pursued by regulators from Indiana, Kentucky, Oklahoma, New Jersey, Texas, Alabama, Washington and Vermont.

Several state regulators, such as New Jersey and Oklahoma, have issued cease and desist orders under which the company must cease operations in these states.

The New Jersey order alleges Voyager Digital violated securities regulations through the Voyager Earn program. Every betting and lending account issued under this program since 2019 in New Jersey is an unregistered security due to the promise of interest rates as high as 12%.

“Through efforts like these, we continue to hold everyone accountable to everyone who threatens the integrity of our financial industry and puts investors at risk,” said Attorney General Matthew Platkin comment.

The New Jersey Securities and Exchange Commission alleges that Voyager has 52,800 accounts held by residents of the Garden State, valued at $187 million in digital assets. Overall, Voyager is worth around $5 billion from 1.5 million users.

Among the things the New Jersey watchdog targeted was marketing by Voyager, which it believes was deliberately misrepresented. First, the company failed to disclose that its parent company is regulated in Canada, not the United States, which “creates a misleading impression of Voyager Digital, the LLC’s regulatory status.”

Furthermore, the company has been evasive about its licensing. While the company claims on its marketing materials and website to be licensed in the US, it ignores that its license is for the money services business. Such statements “may convey a false impression to unsophisticated investors that Voyager is “licensed” to offer and sell such securities.”

“Effective on April 29, 2022, Voyager will END AND WISH to offer any security, including any Voyager Earnings Program Account, to or from New Jersey unless the security is specified. registered with the Bureau, is a covered security or exempted from registration under the Securities Act,” the Bureau concluded.

Other states such as Texas, Alabama and Vermont have issued formal orders, giving Voyager time to put in place protections against alleged securities violations, or else receive cease and desist orders. cancel.

Joseph Borg, director of the Alabama Securities Commission, told one outlet that the efforts among the eight regulators are coordinated and not random.

“The thrust is to say, ‘OK guys, it’s time to get to the table. There are some slight differences in the sequence but the principles are the same,” he commented.

According to Borg, Voyager Digital and other crypto lenders failed to heed the message regulators were sending when they cracked down on BlockFi. The lender also ended a coordinated crackdown by several state regulators before eventually paying $100 million to the SEC and 32 states to settle fees for selling unregistered securities.

For its part, Voyager Digital denies breaking any securities laws. In a press release on March 30, the company acknowledged receiving orders from various state watchdog agencies but said it was contacting them “to clarify certain statements in orders that Voyager considers incorrect.”

“Voyager firmly believes that the Earnings Program and the Flight Account are not securities and intends to prove its position and defend it as necessary and appropriate,” it added.