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Scrutiny Intensifies on Voyager and Celsius

Regulators in Texas and Alabama are stepping up their investigations into the two failing companies.

Scrutiny Intensifies on Voyager and Celsius
Dallas, Texas; Shutterstock photo by Sean Pavone

Key Takeaways

  • Securities regulators in Texas and Alabama are expanding their investigations into Voyager and Celsius.
  • The Texas State Securities Board is now investigating whether or not Voyager fully disclosed how it used customer funds.
  • By contrast, earlier investigations from the same regulators largely focused on each firm's decision to halt withdrawals.

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Voyager and Celsius are facing expanded investigations from Texas and Alabama regulators, according to Bloomberg.

Securities Regulators Expand Investigation

Texas and Alabama securities regulators are intensifying their gaze on two failing crypto companies.

Regulators from both states are now determining whether Voyager correctly disclosed material information on loans and the credit status of its borrowers, according to Bloomberg.

Today’s report only broadly states that investigations into Celsius will be expanded. However, it is implied that Celsius will be investigated on largely the same grounds.

Joe Rotunda, director of enforcement at the Texas State Securities Board, said the two firms “may not have fully disclosed what they were doing on the backside with investors’ money.”

Furthermore, the companies may not have disclosed the risks involved in their lending activities and may have failed to discuss other types of transactions in which they had engaged.

Celsius and Voyager Both Froze Withdrawals

State regulators began to investigate Celsius and Voyager in mid-June and early July, shortly after each suspended services. Early investigations focused on the decision to halt withdrawals.

Celsius has denied withdrawals since June 13, and there have been few developments since then. The company is now exploring strategic transactions and liability restructuring.

Voyager froze withdrawals on July 1, nine days after it secured a $500 million loan from Alameda Research. It announced that it would file for Chapter 11 bankruptcy on July 5. Today, the company made its first appearance in court.

Various other crypto companies have also suspended withdrawals, including Vauld, CoinFLEX, and Babel Finance. Three Arrows Capital, meanwhile, has filed for bankruptcy.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.

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