After the recent bankruptcy filings by several cryptocurrency exchanges, the Louisiana Office of Financial Institutions (LOFI) encourages consumers to be aware of the potential risks of investing in volatile crypto assets. Louisiana consumers should be aware that crypto assets are high-risk products, and should not expect to be protected from, or reimbursed for, any losses.
Crypto asset providers are not governed by the same laws, rules and protections as financial institutions, which are required to have federal deposit insurance. The Federal Deposit Insurance Corporation (FDIC) has issued an advisory to inform the general public that it “does not insure assets issued by non-bank entities, such as crypto companies,” and that the FDIC does not protect consumers against “the default, insolvency, or bankruptcy of any non-bank entity, including crypto custodians, exchanges, brokers, wallet providers, or other entities that appear to mimic banks.”1
Some of the products and services offered by crypto asset providers can be similar to traditional financial products and services offered by financial institutions or brokerage firms, but without the same regulatory safeguards. Louisiana consumers should attempt to determine if they are purchasing regulated products through regulated companies, and platforms, before making any investment decisions.
Information regarding the Voyager, Celsius, FTX and BlockFi bankruptcy proceedings may be obtained directly from the following websites:
- Voyager Digital Holdings, Inc. and affiliates commenced voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of New York on July 5, 2022. Public filings are available at: https://cases.stretto.com/Voyager.
- Celsius Network and affiliates commenced voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of New York on July 13, 2022. Public filings are available at: https://cases.stretto.com/Celsius.
- FTX Trading Ltd. and more than 130 affiliates, including West Realm Shires Services Inc., FTX US and Alameda Research Ltd., commenced voluntary Chapter 11 proceedings in U.S. Bankruptcy Court for the District of Delaware on November 11, 2022. Public filings are available at: https://restructuring.ra.kroll.com/FTX/Home-DocketInfo.
- BlockFi Inc. and several affiliates filed a petition for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey on November 28, 2022. Public filings are available at: https://restructuring.ra.kroll.com/blockfi.
If you have any questions, please contact LOFI at (225) 925-4660.