Hustle Mindset

‘It Ruined Me, I have To Start My Whole Life Again’


When Toronto-based crypto lender Voyager Digital filed for Chapter 11 bankruptcy protection on June 5 in the U.S. Southern District Court of New York, its 100,000-plus creditors were left wondering if they will ever see their assets — worth a combined $1-billion-to-$10 billion — again.

The company marketed itself as safe, and told customers its deposit accounts were protected by the national safety net — the U.S. Federal Deposit Insurance Corporation or FDIC banking insurance system — in the event of a failure, Wall Street Journal reported.

It was an attractive pitch in the volatile world of cryptocurrency, and now some customers are saying online said they only just learned their deposits weren’t FDIC insured in the way they thought. FDIC is now looking into Voyager’s marketing, according to a person familiar with the matter. 

Jeffery Cosey, a 37-year-old personal banker in Lansdale, Pennsylvania, thought so highly of Voyager that he deposted 90 percent of his savings there, deeming it to be a better place to keep his money than a traditional bank.

Another customer, a 25-year-old financial adviser in the Chicago area, said “It’s ruined me. I have to start my whole life again.”

A crypto brokerage and lender, Voyager allowed traders to trade crypto assets, spend crypto in the real world using a debit card, and receive high interest on their deposits, which the company used to make loans to third parties. 

Are you interested in getting smart on Life Insurance?
Click here to take the next step

Voyager blamed volatility and contagion in the crypto markets for its bankruptcy after seeing its share price fall more than 90 percent. In June, the company said it had been unable to recoup more than $650 million it loaned to the crypto hedge fund Three Arrows Capital, or 3AC, which went bankrupt.

According to writer Frances Coppola, Voyager’s loan book accounted for almost half of its total assets, and nearly 60 percent of that loan book was loans to Three Arrows.

Several other crypto companies, especially lenders, have had solvency crises in the last month, causing some to freeze customer withdrawals. Celsius started the contagion, if that’s what this is, by suspending withdrawals in mid-June. 

Voyager listed its assets and its liabilities as each being somewhere in the $1-billion-to-$10 billion range.

Cosey said Voyager offered him a sign-up bonus. He liked the high rate of return on deposits compared to what regular banks offered, and while he understood the risks associated with crypto, said he felt comfortable that Voyager was publicly traded in Canada and run by a former eTRADE executive, Stephen Ehrlich. “They all seemed trustworthy. They all seemed legitimate, not sketchy or fly-by-night or risky,” he told Vice‘s Motherboard. 

Cosey’s investments were split between Bitcoin, Ethereum, other smaller crypto holdings and USD Coin (USDC), a “stablecoin.”

Voyager had an account at a small New York Bank, Metropolitan Commercial Bank, called a “For Benefit of Customers” account — standard for crypto firms and other fintech companies that act like banks by taking customer deposits but don’t have the licenses or ability to actually be a bank, Wall Street Journal reported.

Voyager froze all activity, including withdrawals on $350 million in customer deposits at Metropolitan Commercial Bank, saying customers will be able to access those dollars after “a reconciliation and fraud prevention process is completed.”

At Voyager, the accounts hold the cash customers use for buying crypto assets or accumulating from selling them. Metropolitan is one of the few banks willing to work with crypto firms. It held about $1.1 billion in deposits tied to crypto, 19 percent of its total, according to disclosures.

Image: Moguldom/Nubai

Source link


Ben Crump Joins Lawsuit Against Baltimore City Schools

Previous article

Ray J Gets Tattoo of His Sister Brandy On his Leg, Twitter Reacts

Next article


Leave a reply

Your email address will not be published. Required fields are marked *