Regulator control over cryptocurrency lender Voyager intensifies

Security regulators in Texas and Alabama have intensified the investigation of cryptocurrency lender Voyager after the recent decline the platform has seen.

Immediately after the information about the loans and the credit status of the borrowers appeared, regulators expanded the investigation of the collapsed crypto-lender platform.

Not only Voyager, even Celsius Network Ltd which also experienced an implosion recently has received the same treatment from the regulators. Securities regulators are currently reviewing 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 lending companies may not have fully revealed what they did on the back with investors’ money. The risks associated with these types of lending practices, or even other types of transactions they participate in.

There have been concerns about information about the loans and even the creditworthiness of the borrowers, especially after Voyager Digital Ltd froze withdrawals last month.

Regulators from Texas, Albama and New Jersey have expanded the investigation primarily for the aforementioned reason.

Examination of product offerings

Reports indicated that crypto-regulators were focused on examining product offerings at Voyager. These also included the unregistered securities. Voyager offered a fairly high return. The platform continues to offer these high rates of return.

Amanda Senn, deputy chair of the Alabama Securities Commission, mentioned,

We investigate these companies and try to find out what happened and why. We make requests. These are still the initial stages, but we have a responsibility on behalf of our investors in our states.

The state regulators had already started their investigations in mid-June and also in early July right after Voyager suspended the withdrawal services. The investigations have mainly been about the decision to stop the withdrawals.

Suggested reading | Crypto Lender Voyager Digital goes bankrupt after three arrows collapsed

Voyager received a huge loan from Alameda Research

Voyager had discontinued its withdrawal service as of July. The platform secured a $ 500 million loan from Alameda Research at the end of last month. Despite the loan, Voyager was unable to recover from the bankruptcy.

Voyager’s bankruptcy filing revealed that Sam Bankman-Frieds Alameda Research had owed the platform over $ 377 million. Voyager had also mentioned that it would announce the Chapter 11 bankruptcy on July 5.

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

Not only Voyager and Celsius, other crypto companies also suffered due to the downturn in the industry.

Recently, Three Arrows Capital, a crypto hedge fund, went bankrupt. Other companies have also frozen withdrawals, these include CoinFLEX, Vauld and Babel Finance.

Related reading | Breaking: KeyFi files lawsuit against Celsius, millions of dollars in jeopardy?

Crypto
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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