US demands Voyager clarify client funds are not FDIC insured

Bankrupt crypto platform Voyager Digital LLC must correct “false and misleading statements” that suggested its customers were covered by Federal Deposit Insurance Corporation protection, US officials said on Thursday. 

Voyager, one of the latest casualties of the turmoil in crypto markets, had publicly said in some materials that any US dollars deposited with the firm are covered by FDIC insurance, thanks to its partnership with Metropolitan Commercial Bank. The FDIC said earlier this month that while the bank is insured, Voyager is not. Therefore deposit insurance does not protect Voyager customers against the digital-asset firm’s default.

In a joint statement on Thursday, the Federal Reserve and FDIC said it had issued a letter demanding that Voyager stop making such claims and correct previous statements.     

“These representations are false and misleading,” the regulators said. “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.”

A representative for Voyager declined to comment. 

Wording posted in 2019 on a company web page stated that this protection would take effect in the “rare event your USD funds are compromised due to the company or our banking partner’s failure,” according to the Wayback Machine, which keeps an archive of Internet content. The wording has since been changed. 

Normally such insurance would cover as much as $250,000 in losses per depositor — sometimes more if a customer holds several different types of accounts. 

In May, the FDIC approved regulations clarifying the regulator’s procedures for taking action against firms and people who make misleading claims about deposit insurance.  

(Updates with Voyager declining to comment.)
–With assistance from Lydia Beyoud and Joanna Ossinger.