The New Jersey Securities Bureau has issued a cease and desist order for the sale of unregistered Voyager Digital securities through its Voyager Earn program.
Voyager Digital (VGX) is a centralized crypto platform for staking, trading and lending.
The order alleges that each of the cryptocurrency placement and lending accounts issued under the program since 2019 are non-registered securities due to the promise of interest rates of up to 12%.
The bureau cites as evidence claims messages on the Voyager homepage urging users to “expand your portfolio” and “go to new frontiers of investment.”
New Jersey claims about 52,800 accounts and $187 million in assets are owned by users residing in the state, out of about 1.5 million active accounts and $5 billion in assets on Voyager overall.
Voyager’s marketing tactics have also been criticized, with regulators claiming promotions for the program failing to disclose that Voyager’s parent company Digital LLC is a public company in Canada, not the US. Regulatory status of Digital, LLC.
The Bureau also claims that while Voyager claimed to be licensed, it was only licensed in some states to operate as a “money service business”, which the Bureau claims does not allow the sale of unregistered securities. He added that the claim “might give unsophisticated investors the false impression that Voyager has a ‘licence’ to offer and sell such securities.”
At least five other states, Alabama, Oklahoma, Texas, Kentucky and Vermont, issued various orders to Voyager or required the company to explain why it does not issue non-registered securities if it wants to continue business in their states.
This incident is one of a growing list of such cases or orders against crypto companies that offer interest-bearing accounts to users. In February, cryptocurrency lending platform BlockFi received a similar cease and desist order from the state of Washington and a $100 million fine for selling unregistered securities in the form of interest-bearing accounts.
Related: Class action lawsuit against Coinbase claims securities sale is unregulated
Last September, the Securities and Exchange Commission (SEC) threatened to sue cryptocurrency exchange Coinbase if it launched its long-awaited Coinbase Lend program. This program resembled Blockfi and Voyager interest-bearing accounts for cryptocurrency lenders. At the time, Coinbase CEO Brian Armstrong called the SEC’s behavior “really sketchy” as the threat came without any legal initiative.