The Federal Trade Commission (FTC) has reached a settlement with the bankrupt cryptocurrency company Voyager over false claims that customer accounts were insured by the Federal Deposit Insurance Corporation (FDIC). Voyager, which lost more than $1 billion through cryptocurrency investments, misled its customers and is now permanently banned from handling consumers' assets.
The settlement comes after Voyager and its former CEO, Stephen Ehrlich, deceived consumers by claiming that their deposits were fully backed by the FDIC. However, this was not true, and as a result, consumers lost access to significant assets, including college tuition funds and down payments for homes.
"Consumers reported over $1.4 billion in losses to cryptocurrency scams in the last year, and the FTC continues to crack down on those who lie to consumers about these risky assets," said Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "This action reminds companies and individuals: don't play fast and loose with claims about FDIC insurance."
Samuel Levine
| LinkedIn
Voyager, not being a bank or financial institution, was not eligible to provide FDIC insurance to its customers' funds. Instead, the company placed the funds in a traditional bank under a Voyager account, which would be protected if the bank itself failed but not if the company failed.
The FTC's complaint highlighted that Voyager was aware that its claims could mislead consumers. In 2021, the bank where Voyager deposited consumers' funds contacted the company, stating that the claims of FDIC backing were potentially misleading. Despite this, Ehrlich assured customers in a June 2022 newsletter that the company and their funds were safe and would withstand the weakening market.
As part of the settlement, Voyager is permanently banned from handling consumers' assets, and a suit is being filed against former CEO Stephen Ehrlich. This case serves as a reminder to companies and individuals in the cryptocurrency industry to be transparent and truthful in their claims to consumers.
