The United States Federal Trade Commission said it has opened an investigation into crypto lending firm 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 deceptive and unfair marketing of cryptocurrencies to the public.” The announcement came after bankruptcy judge Michael Wiles initially approved a plan in which Voyager’s debtors would sell the firm’s assets to Binance.US for more than $1 billion.
According to the FTC filing – Debtors Objecting to the Plan – the commission argued that certain parties involved in Voyager’s bankruptcy proceedings should not be exempt from certain financial claims, “including debts for ‘false representation’ and ‘false pretenses'”:
“By not excluding, inter alia, false claims and false representations, the release may be read to interfere with the cause of action by a government entity such as the FTC. This is unacceptable […] The FTC respectfully requests the Court to deny confirmation of the Debtors’ proposed plan.
New @FTC Analysis shows cryptocurrency scams are on the rise, with nearly 1 out of every 4 dollars reported lost to fraud paid in cryptocurrency.
Since the start of 2021, consumers have reported losing over $1 billion in crypto to scams.https://t.co/AnWqzj93jK
— Lina Khan (@linkhanftc) June 3, 2022
Voyager filed for Chapter 11 bankruptcy in the United States in July 2022, following similar filings from Celsius Network, FTX and BlockFi. One of the firm’s proposed plans to restructure would have Binance.US acquire Voyager’s assets, but the US Securities and Exchange Commission has objected to the move, citing a lack of “required information”.
Related: Voyager creditors summon SBF to appear in court for ‘remote deposit’
Bankruptcy proceedings are also underway for Celsius and FTX, with respective CEOs Alex Mashinsky and Sam Bankman-Fried facing scrutiny from US authorities for their alleged actions prior to the companies filing for Chapter 11. Under Celsius’ proposed restructuring plan, more than 85% of users were expected to recover about 70% of their funds.
