The New Jersey Securities Exchange issued a ban on the sale of unregistered Voyager Digital through the Voyager Earn program.
Voyager Digital (VGX) is a centralized platform for cryptocurrency investing, trading and lending.
The order alleges that every crypto deposit and loan accounts issued under the program since 2019 are unregistered securities due to the promise of interest rates of up to 12%.
Special Forces cite evidence statements on the Voyager website that encourage users to “expand their portfolio” and “reach a new investment limit.”
New Jersey claims about 52,800 accounts and $187 million in assets are owned by users in the state, out of about 1.5 million active accounts and $5 billion in assets on Voyager overall.
The New Jersey Securities Exchange issued an order to cease and desist Voyager Digital.
Voyager’s marketing tactics have also been criticized, with organizers advertising campaigns to support the program but failing to disclose that Voyager’s parent company, Voyager Digital LLC, is listed in Canada rather than the United States. The order states that this “creates a false impression of the legal and regulatory status of Voyager Digital, LLC.”
The bureau also claims that despite Voyager’s claim that it is licensed, it has only been licensed in some states to operate as a “financial services company,” which the bureau claims does not allow the sale of unregistered securities. He added that the announcement “may give inexperienced investors the false impression that Voyager has a ‘license’ to offer and sell these securities.”
At least five other states, Alabama, Oklahoma, Texas, Kentucky and Vermont, have either hit Voyager with different requests or asked the company to explain why it is not issuing unregistered securities if it wants to continue its business in their states.
This event is one of a growing list of such cases or claims against crypto companies offering interest-bearing accounts to users. In February, crypto-lending platform BlockFi was hit with a similar cease-fire from Washington state and a $100 million fine for selling unlisted securities in the form of interest-bearing accounts.
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Last September, the Securities and Exchange Commission (SEC) threatened to sue crypto exchange Coinbase if it launched its long-awaited Coinbase Lend. This program will be similar to Blockfi and Voyager accounts that carry interest in cryptocurrency. At the time, Coinbase President Brian Armstrong described the SEC’s behavior as “really superficial” because the threat came without any legal oversight.