The United States Federal Trade Commission said it has begun an investigation into crypto lending company Voyager Digital in parallel with the company’s bankruptcy proceedings.
In a February 22 filing in the US Bankruptcy Court for the Southern District of New York, the FTC said it was investigating Voyager and its employees “for fraudulent and unfair marketing of cryptocurrency to the public.” The announcement comes after Bankruptcy Judge Michael Wiles first approved a plan in which Voyager’s creditors would sell the company’s assets to Binance.US for more than $1 billion.
According to the FTC filing – an objection to the plan of the debtors – the commission confirmed that some parties involved in the Voyager bankruptcy process should not be exempted from certain financial claims, “including debts for ‘false representation,’ and ‘false pretenses’ ” :
“By excluding, inter alia, false pretenses and false representations, the release could be read to interfere with a cause of action by a government unit like the FTC. This is not allowed […] The FTC respectfully requests that the Court deny confirmation of the Debtor’s Proposed Plan.
New @FTC analysis shows that cryptocurrency scams are proliferating, with about 1 out of every 4 dollars reported lost to fraud paid in cryptocurrency.
Since the start of 2021, consumers have reported more than $1 billion in crypto losses due to fraud.https://t.co/AnWqzj93jK
– Lina Khan (@linakhanFTC) June 3, 2022
Voyager filed for Chapter 11 bankruptcy in the United States in July 2022 ahead of similar filings by Celsius Network, FTX and BlockFi. One of the proposed plans for the restructuring of the company is that Binance.US acquires Voyager assets, but the US Securities and Exchange Commission rejected the move, citing a lack of “necessary information.”
related: Voyager creditors subpoena SBF to appear in court for ‘remote deposition’
Bankruptcy proceedings for Celsius and FTX are also underway, with CEOs Alex Mashinsky and Sam Bankman-Fried facing scrutiny from US authorities for alleged actions before the company filed for Chapter 11. Under Celsius’ proposed restructuring plan, more than 85% of users are expected to recover approx. – about 70% of the funds.