Voyager digital’s path to insolvency in the market.
The market crash which occurred in May, had a catastrophic effect on the crypto lending platform Voyager Digital. The crash impacted the company in such a way that, the company went on to file a chapter of Bankruptcy, recently.
The crypto lending platform went on to suspend the withdrawal activities of the customers, keeping the funds of the investors frozen in their accounts. Then as the credit facility failure debacle happened by Three Arrows, the crypto lending company went on to file chapter 11 for bankruptcy.
It is believed that Voyager Digital portrayed to the customers that their funds will be covered under FDIC (Federal Deposit Insurance Corporation), as its integration happened with the Metropolitan Commercial Bank of New York.
But according to the terms listed out by the Metropolitan Commercial Bank, the FDIC insurance is actually available only to protect the funds that have been stored against the name of the bank. In case the bank fails, the insurance can be claimed by the investors. But the terms clearly state that FDIC is not applicable for any kind of failure that Voyager goes through and does not cover the loss in the value of crypto currency.
According to the claims made by Voyager, the crypto lending company went on to influence and mislead investors by stating that, all the funds of the company are FDIC covered.
The regulatory body intervenes to stop Voyager from claiming false facts.
It was reported that, the Federal Reserve and Federal Deposit Insurance corporation, sent a letter to the crypto lending company to stop the claims about the FDIC. As the matters were investigated further, it came into notice that, the company just had a deposit account with the bank and none of the funds of the users of voyager was FDIC insured.
Crypto industries going bankrupt.
Not only Voyager Digital, but many crypto giants are going bankrupt due to the prevailing market conditions. The investors do not even know if their funds are safe or not. There is no clarity amongst the industry as of now. According to the reports, FTX headed by Sam Bankman-Fried is the only company, that’s trying to revive the market and bring it to normalcy.
Voyager Digital’s debacle certainly raises questions about the business operations that the institution was carrying out, misleading people with false claims. Though the company tried to mislead the people, eventually the company met its fate and became insolvent.