Securities regulators in at least seven U.S. states are scrutinizing Canadian crypto investments firm Voyager Digital over its offering of interest-bearing crypto accounts, Director of the Alabama Securities Commission Joseph Borg told CoinDesk Tuesday.
The states – New Jersey, Alabama, Oklahoma, Texas, Kentucky, Vermont and Washington – believe Voyager Digital’s “Earn Program” accounts may be unregistered securities, he said. They coordinated to file separate legal actions (including at least one “cease and desist”) against the publicly traded firm.
“The thrust is to say, ‘OK guys, it’s time to come to the table,” Borg said in a phone call.
The effort continues a yearlong battle by U.S. states to bring crypto interest accounts under their regulatory domain. BlockFi was the first company to fall under their microscope last July. It ultimately settled with state and federal regulators after paying a $100 million fine and promising to register its product as a security.
“There are some minor differences in the order but the principles are the same,” Borg said of Voyager Digital and BlockFi.
He expressed surprise that Voyager Digital and others hadn’t gotten the message of compliance that BlockFi’s precedent set.
Voyager Digital has over $5 billion and 1.5 million clients wrapped up in its interest program, according to the New Jersey “cease and desist.” The Garden State ordered Voyager Digital to stop opening new interest accounts but is allowing interest payments for existing accounts.
Alabama’s order is slightly different, taking the form of a “show cause” filing that gives Voyager a window to defend itself against before the “cease and desist” comes online. The states that moved Tuesday did a mix of show cause and cease and desist orders, Borg said.
Borg suggested that crypto interest accounts should be subject to the same regulatory scrutiny applied to other interest-bearing investment products. Without oversight, he said customers could have no guarantees their money was safe, secure, or even accessible.
“We want these folks to be in compliance,” he said.
Voyager Digital CEO Steve Ehrlich did not pick up the phone.
UPDATE (March 30, 0:29 UTC): Adds information from Joseph Borg.
DISCLOSURE
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Danny is CoinDesk’s deputy business editor. He owns BTC, ETH and SOL.
Sign up for State of Crypto, our weekly newsletter examining the intersection of cryptocurrency and government
By signing up, you will receive emails about CoinDesk product updates, events and marketing and you agree to our terms of services and privacy policy.