Voyager, Celsius implosions spur expanded Texas, Alabama investigations

Securities regulators in Texas and Alabama are expanding their investigations into Voyager Digital and Celsius Network to account for new information arising from the implosions of the two crypto-lending firms.

The two states are examining if Voyager properly disclosed material information on its loans and the creditworthiness of the borrowers.

Gabby Jones/Bloomberg

Texas and Alabama are among a coalition of U.S. states investigating Voyager and Celsius, including a recent freeze on customer withdrawals at both firms, according to Joe Rotunda, director of enforcement at the Texas State Securities Board, and Amanda Senn, chief deputy director at the Alabama Securities Commission.

What were seeing now is that a lot of these crypto-lending firms may not have fully disclosed what they were doing on the backside with investors money, the risks associated with those types of lending practices or even the other types of transactions they are engaging in, Rotunda said in an interview.

Voyager filed for Chapter 11 bankruptcy protection on Tuesday, just weeks after getting a lifeline from the billionaire Sam Bankman-Frieds Alameda Research, citing market volatility and the collapse of a Three Arrows Capital, the crypto hedge fund it had lent money to. Celsius, which halted user withdrawals in June amid liquidity issues, said last week its exploring options such as strategic transactions as well as a restructuring of our liabilities.