Regulator scrutiny of crypto lender Voyager intensifies

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Security regulators in Texas and Alabama have stepped up their investigations into crypto lender Voyager following the recent crisis witnessed by the platform.

Shortly after the news about loans and borrowers’ credit status emerged, regulators widened the investigation into the crashed crypto lender platform.

Not just Voyager, even Celsius Network Ltd, which also suffered an implosion recently, received the same treatment from regulators. Currently, securities regulators are reviewing information about the accuracy of the disclosed information provided by Voyager.

Texas State Securities Board, stated that,

What we are seeing now is that many of these crypto credit companies may not have fully disclosed what they are doing upside down with investors’ money. The risks associated with these types of lending practices, or even the other types of transactions in which they engage.

There have been concerns over loan information and even the creditworthiness of borrowers, particularly after Voyager Digital Ltd froze withdrawals the previous month.

Regulators in Texas, Albama and New Jersey extended the investigation primarily for the aforementioned reason.

Survey of yield product offerings

Reports suggest that crypto regulators are focused on investigating yield product offerings at Voyager. These also included unrecorded titles. Voyager offered fairly high rates of return. The platform continues to deliver these high rates of return.

Amanda Senn, Chief Deputy Director of the Alabama Securities Commission, said,

We are investigating these companies and trying to understand what happened and why. We find out. We are only in the early stages, but we have a responsibility on behalf of our investors in our states.

State regulators had already begun their investigations in mid-June and also in early July just after Voyager suspended its withdrawal services. The investigations mainly focused on the decision to stop direct debits.

Suggested Reading | Crypto lender Voyager Digital goes bankrupt after three-arrow collapse

Voyager received a huge loan from Alameda Research

Voyager had ceased its withdrawal service from July. The platform secured a $500 million loan from Alameda Research late last month. Despite the loan, Voyager failed to emerge from bankruptcy.

Voyager’s bankruptcy filing revealed Sam Bankman-Fried’s Alameda Research owed the platform more than $377 million. Voyager had also mentioned that it would file for Chapter 11 bankruptcy on July 5.

The company recently appeared in court for the first time. Celsius is also among the companies that have frozen withdrawals since mid-June.

Not only Voyager and Celsius, other crypto companies have also suffered from the industry downturn.

Recently, Three Arrows Capital, a crypto hedge fund, filed for bankruptcy. Other companies have also frozen withdrawals, including CoinFLEX, Vauld, and Babel Finance.

Related Reading | Breaking: KeyFi Files Lawsuit Against Celsius, Millions at Risk?

Bitcoin was priced at $21,700 on the four-hour chart | Source: BTCUSD on TradingView
  Featured image from Bloomberg.com, chart from Tradingview.com
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