State Regulators Take Action Against Voyager Digital’s Initial Coin Offering

The concerted legal campaign is reminiscent of BlockFi’s legal struggle, which resulted in a $100 million fine and a commitment to register as security.

Securities authorities in at least seven states in the United States are investigating Canadian cryptocurrency investment company Voyager Digital for its interest-bearing cryptocurrency accounts, Alabama Securities Commission Director Joseph Borg told CoinDesk Tuesday.

According to him, the states of New Jersey, Alabama, Oklahoma, Texas, Kentucky, Vermont, and Washington think Voyager Digital’s “Earn Program” accounts are unregistered securities. They collaborated to bring separate legal measures against the publicly listed company (including at least one “stop and desist” letter). “The objective is to say, ‘OK, folks, it’s time to come to the table,'” Borg said over the phone.

The initiative builds on a year-long campaign waged by states in the United States to bring crypto interest accounts inside their regulatory purview. Last July, BlockFi became the first startup to come under their scrutiny. It eventually reached an agreement with state and federal authorities, agreeing to pay a $100 million fine and vowing to register its product as security.

“While the sequence is different, the fundamentals are the same,” Borg said of Voyager Digital and BlockFi.

He expressed amazement that Voyager Digital and others had missed the compliance message established by BlockFi’s precedent.

Voyager in numerical order

According to the New Jersey “stop and desist” order, Voyager Digital’s interest program has a value of over $5 billion and 1.5 million customers. The Garden State has ordered Voyager Digital to cease creating new interest-bearing accounts but has let the company continue paying interest on existing accounts.

Alabama’s ruling is significantly different in that it is in the form of a “show cause” file that provides Voyager with an opportunity to defend itself before the “cease and desist” order takes effect. Borg said the states that moved Tuesday used a combination of show cause and stop and desist orders.

Borg argued that cryptocurrency interest accounts should face the same regulatory scrutiny as conventional interest-bearing financial products. Without control, he said, clients cannot be certain their money is safe, secure, or even available.

Also Read: Crypto Theft Warning Issued For Billions Of Android And iPhone Users