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US watchdogs order Voyager Digital to stop making misleading insurance claims

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US watchdogs order Voyager Digital to stop making misleading insurance claims

US watchdogs order Voyager Digital to stop making misleading insurance claims Christian Nwobodo · 7 hours ago · 2 min read

The U.S. FED and FDIC ordered Voyager Digital to desist from making public claims that its assets are insured by the FDIC.

2 min read

Updated: July 29, 2022 at 1:48 pm

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Cover art/illustration via CryptoSlate

The U.S. Federal Reserve (FED) and Federal Deposit Insurance Corp (FDIC) have ordered Voyager Digital to desist from making false and misleading claims about its insurance status to customers.

In a joint letter sent to the crypto firm on July 28, the regulators said misleading information by Voyager Digital about its funds being covered by FDIC insurance may have influenced customers into investing in them.

A  Voyager Twitter post from November 12, 2020, showed it made an announcement stating that USD held with Voyager is FDIC insured up to $250,000.

Have you heard? USD held with Voyager is FDIC insured up to $250K. Our customers’ security is our top priority. Start growing your crypto portfolio today.

— Voyager (@investvoyager) November 12, 2020

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The regulators said:

“Based on the information gathered to date, it appears that these representations likely misled and were relied upon by customers who placed their funds with Voyager and do not have immediate access to their funds.”

According to the letter, Voyager has a deposit account with Metropolitan Commercial Bank, which is insured, but had no insurance license from the FDIC to offer its customers.

Voyager has been mandated to remove all misleading statements from all relevant touchpoints within two business days. However, they can engage the regulators for further clarifications if they possess any legal proof of FDIC deposit insurance.

Voyager seeking a way out

The cease and desist order from the regulators is the latest in a string of unfortunate events besieging Voyager.

The 3AC collapse caused Voyager to halt customer withdrawals abruptly. A few days later, it filed for Chapter 11 bankruptcy. Voyager is currently seeking intervention from investors to settle its creditors.

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Sam Bankman-Fried’s FTX exchange offered to buy all of Voyager’s assets and refund customers following the trouble. However, Voyager rebuffed the offer and said it was a “low-ball bid dressed up as a white knight rescue.” 

Voyager backed off the FTX deal and said it is working on a restructuring process to return maximum value to its customers and stakeholders.

In a July 11 update, Voyager started a voluntary restructuring process that will return funds to customers in crypto and common equity. It disclosed that its crypto asset holding amount to approximately $1.3 billion, plus a $650 million debt owed by collapsed Three Arrows Capital (3AC).

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DeFi

DeFi insurance is coming to Solana to protect users against exploits

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DeFi insurance is coming to Solana to protect users against exploits

DeFi insurance is coming to Solana to protect users against exploits Liam ‘Akiba’ Wright · 8 hours ago · 1 min read

CryptoSlate caught up with Rupert from Amulet Protocol, the first DeFi Insurance platform on Solana. He shared some of the ways Amulet will protect users in this video interview

1 min read

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Updated: July 1, 2022 at 5:17 am

Cover art/illustration via CryptoSlate

CryptoSlate spoke to the founder of Amulet Protocol, Rupert Barksfield, about launching the first DeFi Insurance platform on Solana. Watch the video below to find out whether Amulet will be offering insurance against Solana outages, de-peg insurance, and protection against other problems that can occur in DeFi.

Regarding Solana’s infamous downtime, Barksfield compared the current state of Solana to early Ethereum development. He claims that the fact Ethereum users saw “massive outages with Crypto Kitties being launch, the DAO, and we saw the whole chain fall apart multiple times” is a reason to be more forgiving to Solana’s current issues.

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The interview is 23 minutes long, and Barksfield does a fantastic job explaining DeFi insurance and how it can help protect users from the type of black swan events that have plagued crypto over the past few months.

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Bank

Belgian Banking Group KBC Creates Blockchain-Based Coin

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Belgian Banking Group KBC Creates Blockchain-Based Coin

KBC Group, a major European banking and insurance institution headquartered in Belgium, has launched a token based on a blockchain platform. Its customers will be able to acquire the new proprietary coins and use them through their KBC wallet and mobile app.

KBC Issues Digital Coin for Clients and Partners

KBC, the Brussels-based financial group with extensive presence in Central and Eastern Europe, has announced its own crypto called ‘Kate Coin.’ The bank said it’s preparing a large-scale test of the token, with the participation of thousands of employees who will be able to spend it at a festival in Belgium this week, and it will eventually roll it out throughout the group.

The coin comes a year and a half after the launch of Kate, KBC’s personal digital assistant. In a press release, the company noted that a whole new economy is now developing on the basis of technologies such as web 3.0, cryptocurrencies and non-fungible tokens (NFTs). With its latest initiative, KBC wants to enter this new world and confirm its position as a leader in digital banking insurance.

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As a bank-insurer, KBC is focusing on private clients and small to medium-sized enterprises in Belgium, Bulgaria, Hungary, Slovakia, and the Czech Republic. Its customers will be able to acquire Kate coins and use them via their digital wallets and mobile accounts.

The token will initially be available in KBC’s ‘closed loop’ banking and insurance environment. Eventually, it will be introduced into a wider ecosystem, which includes some KBC enterprise customers, third parties and partners that are offering services through the bank’s mobile platform to 1.8 million users.

“Powered by the digital assistant Kate, the Kate Coin will proactively make life easier for our customers throughout the KBC group, today and in the future. The combination of the digital assistant Kate and the Kate Coin will enable KBC customers to save time and money,” KBC Group said in a statement published Thursday.

This isn’t the first time a large banking corporation creates its own digital currency. In 2020, the global investment bank and financial services company JPMorgan announced its own crypto, JPM Coin, also based on blockchain technology and enabling payments between institutional clients.

Tags in this story

Bank, Banking, Belgian, belgium, Central Europe, COIN, Crypto, Cryptocurrencies, Cryptocurrency, Eastern Europe, Europe, financial company, Insurance, insurer, Kate, Kate coin, KBC, KBC Group, Token

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Do you expect other major financial companies to issue their own digital coins? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, Lithuaniakid

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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DeFi

It’s pay out time for DeFi insurance

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It’s pay out time for DeFi insurance

DeFi

An exclusive look into the world of DeFi Insurance from the founders of the biggest projects in the space. They reveal their thinking around the UST de-peg and why they are already paying out

5 min read

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Updated: May 25, 2022 at 12:45 pm

Cover art/illustration via CryptoSlate

👋 Want to work with us? CryptoSlate is hiring for a handful of positions!

Last week founders from the top DeFi insurance companies, Nexus Mutual, InsurAce, Bright Union, and Amulet, came together to discuss the UST de-pegging event.

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The Twitter spaces event lasted around an hour and is available in full via the tweet below.

#DeFi https://t.co/xpy3AKfOWg

— Akiba | Liam Wright 🥷₿ (@akibablade) May 23, 2022

The space was moderated by Rupert Barksfield, Project Lead for Amulet Protocol. The conversation began with a discussion about the UST de-pegging event and whether it was avoidable. Hugh Karp, the founder of Nexus Mutual, began,

“If you experiment and you’re experimenting with lots and lots of people that don’t really understand exactly what you’re experimenting with, then you can end up with some really big problems. And I believe that’s what’s happened here… Things really quickly got out of control.”

Supporting this argument, Robert Forster, CTO of Ease, continued, “I think the team could have easily capped their funds and not gone all in. Essentially, every defi protocol should focus on growing slowly… we need more time to figure things out.” Forster’s thinking suggests that Terra grew too much too fast, and there was a failure of leadership not to cap that growth.

To solve scaling issues, it is possible to artificially hold back growth to allow a proper assessment of all aspects of a project. Terra did not do this, and Forster seemingly believes this was their major mistake.

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Kiril Ivanov, the co-founder of Bright Union, then commented on the silver lining of the event, notably, “DeFi insurance worked out… that’s great because it worked out at scale.” Several DeFi insurance protocols have already begun processing payouts for users who held de-peg insurance policies.

InsurAce was represented by CMO Dan Thomson, who added, “it just became more and more likely until it was unavoidable.”

The risks of algorithmic stablecoins

Rupert brought the conversation over to Karp from Nexus Mutual, who did not offer a product to protect against the de-peg of UST.

“Yeah, we specifically looked at all the algo stables a while back, about a year ago, and specifically decided not to cover any of them. We just thought the risk was too high.

So, you know, that’s, I guess, looking like a good decision now… I’m not saying that we had a crystal ball or anything, we definitely didn’t. We deliberately chose not to cover it because we thought the risk was too high at the moment.”

Forster also added that broader issues were happening simultaneously as the UST event that has gotten lost amid other news.

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the past week is at least three other hacks on bliss finance, mushroom finance, Venus protocol. It seems there was a lot of correlated risk within the system that one coin falling in that regard could have had a sort of domino effect.

Luckily none of us were really exposed to that but it worries me in terms of how safe, how diverse, how much we can actually guess at the risk in something as widely used as stablecoins.”

Forster continues to comment that the event has made him more passionate about adding additional stablecoin offers to his customers and “made me want to figure out more ways to help with the problem.” Barksfield then continued,

“The fallout in my eyes will be there’s going to be a huge chunk taken from folks like on Unslashed and InsurAce and that’s going to really impact on their stake and it’s going to impact staking for all other defi protocols as well.”

Traditional insurance vs. DeFi insurance

DeFi insurance aggregator Ivanov then discussed the differences between traditional and DeFi insurance.

“Speaking of comparing to traditional insurance, what we are having here is that it’s insane. The risk that capital providers bear in this is really, really high. And what happens to savers in InsurAce typically must have been covered by reinsurance capital, which I think pretty much no one has at the moment.

So capital is the issue and the risk is the issue. That is exactly why we launched our bright risk index, the capital pool, single pool, which puts capital in multiple guys here. Basically, the money is spread over to get the maximum diversity, and well, a reasonable return.

We tend to say how cool defi is because it has, this Lego nature like every everything is connectable to everything. And you can exactly see the drawback of that concept, right? And it only happens to use UST but can you imagine just just for a bit, what would happen if let’s say DAI loses its back right? DAI which is the backbone of hundreds and hundreds of protocols out there.

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The smallest scale is the cross-chain breach, for instance, which also holds hundreds of hundreds of assets. How big would the domino effect be? So we are offering the diversity to risk bearing but still a long, long way ahead.”

Responsibility to investigate

The conversation then moved on to the need for an independent body to help regulate and assess risk within the DeFi insurance sector. Thomson from InsurAce started the conversation,

“Having a trusted, independent body that we could really go to for this kind of stuff would be helpful. There are two sides to this coin, you’ve got the policyholders who are claiming, who obviously want to get paid out. So obviously, their information bias is that this is a full sort of qualifiable de-peg event.

Then on the other hand, you’ve got stakers who might be at risk for some of their capital, which they might not be happy about. And some of our stakers aren’t happy about the fact that they’re having to pay out for this. And so some of the information bias comes is that it isn’t a de-peg official event but that it is market manipulation or some other kind of input that might invalidate the entire system.

There’s also the concern of if there are compensation plans, for example, for some of the smaller holders, as you know, or a direct fork of the entire original Terra blockchain in whichever form. These are all sorts of repayments for some, possibly some of our policyholders who may then be essentially getting a double payback.

So is that then something that we should be delaying and waiting for, which does, in a sense, kind of give us more time to figure things out, but it also holds up savings funds for longer.”

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The conversation moves on to discuss regulation within the DeFi insurance space with debate amongst the group on how far this should go. Some advocated for an impartial board to rate protocols and projects to establish fair pricing. In contrast, others believe that risk management is a part of the competitive aspect of their industry.

Some protocols, namely Ease, do not offer collateral-backed underwriting but instead share risk among users, adding a layer to this conversation. Dan from InsurAce also suggested creating a bug bounty program to spot fraudulent claims for policy redemptions. His theory being community regulation through post-mortems of particular events within a bug bounty system could replace the need for an independent central body.

The roundtable conversation came to a close with some comments on how to improve DeFi and the direct effects of the biggest de-peg event in history. Thomson stated,

“We want to be better, we want to make things faster and more efficient, we want to make things more clear cut, we want to ideally have everything straight on-chain. If you can have that independence of verification that something’s happened and having an automatic payout.

At the same time this is the first major Depeg event that is causing any sort of payout, we’re all going to learn from this.”

He also highlights an overlooked element of this event: “there are other sides to it, you’ve got the stakers, who are passionate as well, and they will be slightly overlooked.” Ivanov continued to state that “I think we are in one of the best shapes… it really proves that what we are offering is  needed because the risks are unknown, people need to buy cover.”

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Forster reiterated that protocols should attempt to grow slowly, saying, “There’s no reason for us to want a billion dollars in TVL… it may take time for people to get used to the idea that it’s truly risk sharing rather than insurance.” Thomson then closed out the conversation by stating that he hopes all the protocols can “live through this market.”

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