Texas And Alabama Securities Regulators Investigate Voyager And Celsius Implosions Following New Information
- Part of the reasons for the renewed investigation on Voyager and Celsius centered around the disclosure of borrowers’ information.
Securities regulators from Alabama and Texas will expand their probe into the implosion of crypto lending firms (Voyager Digital and Celsius network). The probe’s expansion became necessary after the regulators received new information regarding their crash.
The two-state regulators are investigating whether Voyager provided accurate information on its borrowers’ loans and creditworthiness. Besides Texas and Alabama, other states are conducting joint investigations over the recent crash of the two crypto lenders, including their freeze of withdrawals on their platforms.
The enforcement director at the Texas state securities board (Joe Rotunda) and the chief deputy director at the Alabama securities commission (Amanda Senn) confirmed to the media that the two-state regulators are working together regarding this investigation.
Rotunda said that the regulator had received new information that these crypto firms might not have revealed how they invested their customers’ money. Also, they were supposed to disclose the risks associated with what they were doing and other crypto transactions.
However, their failure to do this is an offense punishable by law. Voyager received a line of credit from FTX-owned Alameda research a few weeks ago. Surprisingly, the crypto lender filed a chapter 11 bankruptcy protection earlier in the week.
Voyager claimed that its bankruptcy filing was due to the harsh crypto market conditions and the crash of the crypto hedge fund (Three Arrows Capital, 3AC). 3AC’s debt to Voyager is worth nearly $646 million in digital assets.
However, Celsius announced it is searching for the right solutions to its current issues. Some of those options include liabilities restructuring and making strategic transactions. Liquidity issues forced Celsius to announce a pause on withdrawals around the middle of last month.
More Woes for Celsius and Voyager Digital
Many regulators have been probing the crypto lenders’ yield product offerings. There are claims that those offerings were unregistered securities. Third-party banks receive loans from Voyager, while Voyager gives its customers part of the interest from such loans.
Voyager customers have agreed with it to lend their cryptos to third parties in exchange for a fixed percentage in return. Voyager’s bankruptcy filing listed the names of its debtors for the first time.
Many famous crypto firms (especially 3AC and Alameda Research) were on the list. Following this filing, Voyager will not be subject to any state litigation. However, investigations can be going on without hindrance. In its bankruptcy filing, Voyager said it doesn’t expect to receive the total amount of the debts it is being owed.
It is important to note that the regulators’ investigations are still in their early stages. No spokesperson from either crypto lending firm was willing to speak with the media regarding this investigation.