US Probes Crypto Lender Voyager as Genesis Admits Losses

A US agency is investigating embattled cryptocurrency lender Voyager Digital over its marketing of deposit accounts for crypto as the sector continues to be battered by economic and regulatory headwinds.

The Federal Deposit Insurance Corporation official said it appeared that customers assumed their deposits were federally insured by the agency.

But they learned otherwise after Voyager filed for bankruptcy and a banking regulator began an inquiry, the report said. The FDIC official did not did not comment on details of the probe.

Voyager filed for bankruptcy last week, becoming the latest casualty of a drastic fall in cryptocurrency prices. It declined to comment to Reuters on the probe.

Crypto lenders boomed during the pandemic, but have recently run into difficulties following the downfall of a major token in May and global risk-off sentiment.

Separately, Genesis Trading has acknowledged it was exposed to Three Arrows Capital, the Singapore hedge fund that slipped into default recently, but managed to reduce its losses.

Michael Moro, Genesis chief executive, said parent company Digital Capital Group had assumed some of its liabilities.

Moro wrote on Twitter that Genesis was looking at other ways to recover potential losses.

“In times of broad market fragility, we want our clients to know that we are here supporting them as a leader in the crypto capital markets,” Moro said.

“Genesis will be around for the long term and we are committed to driving this industry forward.”