A spokesperson for the Federal Deposit Insurance Corporation (FDIC), which protects customers in the event of bank defaults, said the agency is studying how bankrupt Voyager Digital could market itself.
Voyager, another victim of the turmoil in the cryptocurrency markets, had previously stated that all the dollars it deposited with the FDIC under its partnership with the Metropolitan Bank was insured. A statement on one of the company’s Web pages said that this protection will take effect “in the event that a rare event occurs and your dollars are threatened by the failure of the company or our banking partner,” according to the Wayback Machine, which maintains an archive of Internet content.
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This wording has been modified as of July 7, clearing the explicit reference to a company or bank default, and replacing it with “In the event of a rare event and your dollars are threatened, we guarantee you full payment (up to $250,000), so your money is with Voyager ) protected. Meanwhile, Metropolitan Commercial Bank recently issued a statement informing Voyager clients that the FDIC coverage applies in the event that the bank itself fails, not Voyager. Voyager declined to comment when asked about the FDIC’s investigation and the reason for changing the wording on its website.
For its part, the US government has been increasingly concerned about companies spreading false advertisements to consumers about deposit insurance. The FDIC in May issued a final rule prohibiting companies from making such kinds of misrepresentations or misuse of the institution’s name or logo, with those who violate the rule facing legal enforcement action, including fines. Meanwhile, the Consumer Financial Protection Bureau issued a warning on the matter, saying, “The issue has taken on renewed importance with the advent of financial technologies, such as crypto assets, including stablecoins.”
An FDIC spokesperson stressed in an email on July 7 that while the Metropolitan Commercial Bank is insured by the FDIC, Voyager is not. The spokesman said that deposit insurance does not protect customers from “Voyager” default, bankruptcy, freezing of its withdrawals or loss of value of products. The Consumer Financial Protection Bureau declined to comment. Voyager temporarily suspended customer deposits and withdrawals last week, then filed for Chapter 11 bankruptcy late on July 5.
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protection of individuals
Social media has been abuzz with confused and frustrated customers who fear not getting paid for their cryptocurrency and cash. Some said they were misled by the company’s previous statements about its insurance coverage with the FDIC.
This insurance usually covers up to $250,000 in losses per depositor, and sometimes more if the client has different types of accounts.
Frances Coppola, a financial blogger who writes about the problems companies face, said the precise terms in Voyager’s user agreement were clear about applying FDIC protection only in the event that a partner bank defaulted, but that this is often overlooked by mainstream investors. individuals.
She said that some of Voyager’s marketing materials were misleading, even if it was not clear whether the company had committed any legal error, describing the matter as a “misleading sale.”