Advertisement
Advertisement

New Jersey Slaps Voyager Digital With a ‘Cease and Desist’ Order

By:
Aaryamann Shrivastava
Updated: Mar 30, 2022, 14:15 UTC

The order comes at a time when the growing crypto adoption is also becoming the center of attention for Federal agencies.

New Jersey Slaps Voyager Digital With a ‘Cease and Desist’ Order

Key Insights:

  • Voyager Digital received a ‘Cease and Desist’ notice from the state of New Jersey.
  • The order reasons Voyager’s Earn program through which it sold unregistered securities.
  • This is another big blow to crypto after SEC’s $100 million BlockFi fine.

Operating in multiple states throughout the United States, Voyager Digital LLC has been known for its earn programs.

The Delaware-based centralized company provides a variety of crypto services, including lending, digital asset staking, and proprietary trading, which became its undoing.

Voyager Digital To Desist

As explained in the notice by the New Jersey Bureau of Securities, Voyager Digital has been running its Voyager Earn Program unregistered with the Bureau.

Thus all the cryptocurrency stored in trading accounts affiliated with this program were rendered unprotected and uninsured by the Securities Investor Protection Corporation (“SIPC”), the Federal Deposit Insurance Corporation (“FDIC”), or the National Credit Union Administration (“NCUA”).

This puts the 1.53 million account holders’ deposits at risk, which amounts to approximately $5 billion. Of these 1.53 million accounts, about 3.4% (52,800) are based out of New Jersey, which combined hold about $195 million in digital assets.

But despite the order, Voyager has not been exempted from paying the 9% annual interest to the depositors. Adding on to the same, the notice stated,

“The Bureau Chief enters this order to protect the investing public by halting the offer and sale of these unregistered securities, and the contribution of additional assets to existing Voyager Earn Program Accounts. Nothing in this order shall preclude Voyager, or any of its affiliates, from paying interest, also known as “Rewards,” on the existing Voyager Earn Program Accounts or refunding principal to the Voyager Earn Program Account investors consistent with Voyager’s Customer Agreement.”

The Government and Crypto

Recent few months have observed increased participation of government authorities when it comes to cryptocurrencies or DeFi related matters.

While the acknowledgment of the increased crypto adoption is one thing, up until now, most of their participation hasn’t been in favor of crypto service providers.

Last month FXEmpire reported about the crypto lending dApp BlockFi, which was fined by the Securities and Exchange Commission (SEC) for $100 million, which marked the biggest fine issued by the regulatory authority in its history.

Furthermore, the White House also urged multiple major cryptocurrency exchanges such as Binance, FTX, and Coinbase to block Russian sanctioned accounts.

While the motive behind the same might not be hostile for crypto, it does raise the question of how far further the government will interfere in the decentralized economy’s operations.

About the Author

Holding a Mass Media Degree has enabled me to better understand the nitty-gritty of being a journalist and writing about cryptocurrencies’ news and price movements, effects of market developments, and the butterfly effect of individual assets nurtured me into a better investor as well.

Did you find this article useful?

Advertisement