Voyager Digital Is Being Sued Over Unregistered Crypto Sales

Voyager Digital got hit with new allegations in a class-action lawsuit for selling unregistered securities via interest-earning crypto accounts.

Bishal Kumar Chanda3 min read
Voyager Digital Is Being Sued Over Unregistered Crypto Sales

Voyager Digital got hit with new allegations in a class-action lawsuit for selling unregistered securities via interest-earning crypto accounts. Moreover, the complaint filed by lawyers Adam Moskowitz and Stuart Grossman includes a report detailing why the Voyager earn program should have been registered with the SEC.

Allegations Against The Voyager Earn Program

The Voyager Earn Program allows users to stake and earn on over 40 cryptocurrencies. Users can earn tiered rewards depending on how much they hold. In fact, tiered annual percentage yields can go as high as 12%, while Voyager offers 9% APY for staking USDC.

Reportedly, the company has done over 36 million consumer crypto transactions. As a result, reaching a total of $5.5 billion in net new retail deposits since its inception.

Meanwhile, the lawyers filed a complaint against Voyager Digital in December 2021. Furthermore, it was on behalf of Florida resident Mark Cassidy, alleging the firm charged hidden fees and made false promises.

In brief, it claimed that Voyager's bid-ask spread "is kept intentionally wide." Bid-ask is the highest bid offered by a buyer and the lowest bid accepted by the seller.

Within the new lawsuit, the lawyers have also highlighted the steps taken by the SEC against the crypto firm. According to Cassidy's lawyers, litigation could result in more than $1 billion in compensation for Voyager users.

According to the latest complaint, Voyager previously claimed Florida court had no jurisdiction over the company. However, Voyager is listed on the Toronto Stock Exchange and sells its stocks over-the-counter in the United States, including Florida. In addition, thousands of its interest-earning accounts are based in Florida.

Also, Voyager claimed that they should not have to respond to the complaint since Cassidy signed an "arbitration agreement."

On March 30, some US state securities issued cease and desist orders over Voyager Digital's crypto-yielding products. Further, it included the states of Indiana, Kentucky, New Jersey, and Oklahoma.

According to the company, it is in ongoing communications with these state regulators. Voyager is trying "to better understand the terms in their respective regulatory orders" to clarify things in the orders that Voyager finds inaccurate.

The SEC's Battle Against Crypto Lending Platforms

In February, Voyager competitor BlockFi agreed to pay $100 million to the SEC and state regulators. The settlement came following the SEC's allegations of BlockFi's high-interest yield product as unregistered securities. However, Voyager CEO Stephen Ehrlich claims differences between Voyager's Loyalty Program and BlockFi interest accounts.

Moreover, in 2021, Coinbase revealed SEC's plans to sue them over the planned release of "Coinbase Lend." The Coinbase Lend would allow customers to earn interest on selected cryptocurrencies, starting with a 4% APY on USD Coin. As a result, Coinbase shelved the product despite the SEC's failure to provide any rationale.

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