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.
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