Voyager Digital Withdrawal Limits Spell End for Crypto Platform - Sell VGVoyager Digital filed for bankruptcy recently after halting withdrawals from the platform. Banking regulators in the United States have now ordered the cryptocurrency exchange to refrain from making “false and misleading” allegations that the government protected customer funds.

Voyager receives a warning from US regulators

On Thursday, the Federal Reserve and the Federal Deposit Insurance Corp (FDIC) sent a letter to Voyager saying that the organization made false claims to their clients that their funds were insured by the FDIC.

The regulatory bodies added that the company and its executives had made several statements in the past claiming that the FDIC insured their funds. It claimed that users who deposited fiat and cryptocurrencies on the platform would be insured and that the FDIC would insure users against the exchange’s failure.

However, contrary to its claims, Voyager had only a deposit account at the Metropolitan Commercial Bank. Moreover, customers investing through the company’s platform had no FDIC insurance.

The FDIC and the Federal Reserve issued a joint statement that, going by the information gathered so far; it seems that the representations made were misleading. Customers used the claims to place their trust in Voyager by depositing funds. However, these users now lacked access to their funds.

The company executives sent a letter where they ordered the company to halt all the misleading claims made within two business days after receiving the letter. The regulators added that these changes would not prevent the agencies from taking further action against the company.

Voyager’s bankruptcy filing

Voyager was one of the largest cryptocurrency exchanges supporting Bitcoin and many other low-cap cryptos. However, it has struggled following the ongoing crypto winter that has claimed many cryptocurrency companies.

Before its collapse, Voyager had over 100,000 creditors, between $1 billion to $10 billion worth of assets, and another $10 billion in liabilities. Earlier this month, Voyager issued a notice of default to Three Arrows Capital for failing to repay a $680 million loan. After 3AC could not repay the loan, it caused a liquidity crunch on Voyager, which was forced to halt withdrawals and later filed for bankruptcy.

In June, Voyager signed a deal with the Alameda trading company founded by Sam Bankman-Fried for a revolving line of credit. The bankruptcy filing also showed that Alameda was the biggest single credit of Voyager, with $75 million in unsecured loans.

Recently, FTX proposed a deal to Voyager where Voyager customers would create an account with FTX. The user account balances would reflect capital equivalent to their bankruptcy claims. However, Voyager has rejected the deal saying it will harm their customers.