The purportedly commission-free Voyager cryptocurrency trading platform has been misrepresented by its operators and designed deliberately to take advantage of young, inexperienced investors, a proposed class action alleges.
The 29-page complaint alleges that although Voyager Digital LTD and Voyager Digital LLC have touted their cryptocurrency trading platform as “100% Commission-Free,” and assured customers that they’ll receive the best possible price on trades, Voyager is, in truth, designed specifically to take advantage of those who use mobile apps to make their investments. According to the case, the defendants’ “100% Commission-Free” claim is misleading and exists only for Voyager to gain an advantage over competitors such as Coinbase, Kraken or Binance, who disclose the commissions and fees they charge on trades.
As the lawsuit tells it, the companies behind Voyager never disclose to investors that they intentionally set pricing on the platform high enough so as to collect “exorbitant hidden commissions on every cryptocurrency trade.”
“Put simply, Plaintiffs will provide that the Deceptive Voyager Program is a house of cards, built on false promises and factually impossible representations that were specifically designed to take advantage of this cryptocurrency craze to the direct detriment of any ordinary investor,” the lawsuit says.
According to the complaint, Voyager capitalizes on customers’ naivete and unsophistication by throwing up “smoke screens,” under the guise of “Smart Order Routing,” the “Voyager Pricing Engine” and the “Proprietary Fills Algorithm,” that allow the defendants to collect likely more in hidden commissions than their competition. Per the suit, another form of smoke screen before investors is the public support Voyager has received from Dallas Mavericks owner Mark Cuban, who the lawsuit argues “gives a great illustration” as to how the defendants are targeting unsophisticated traders with “false and misleading promises.”
Another method the lawsuit alleges Voyager uses to mask the large commissions it supposedly earns is intentionally keeping wide the spread, or the difference between an asset’s bid price and ask price. The lawsuit alleges that although Voyager also displays for each cryptocurrency a “fair market price” that falls somewhere in the middle of the spread, the defendants will automatically execute orders at the highest end of the spread, and pocket secret commissions.
Moreover, once a user submits a market buy order, the estimated price for the trade that’s displayed on the Voyager platform will automatically default to an amount higher than the quoted “ask price” at the top end of the spread, the case claims. As a result, an order can execute at an amount that is less than the estimated price for the trade yet still at the very top end of the Voyager spread, the suit says.
The filing alleges that Voyager, to “obscure this overarching scheme,” relies on “vague and opaque representations” that it will only share in “price improvement,” when it can fill a user’s order at a price better than the one the user was quoted. The suit tacks on that this is “not the bid/ask spread or fair market price, but rather the jacked up estimate price that is only shown after the customer submits the market order.”
With regard to Voyager’s claim that it can offer users “Better Pricing on Trades,” the lawsuit, citing studies from blockchain forensics investigator and CipherBlade co-founder Richard A. Sanders and from chartered IT professional Dr. Stephen Peter Castell, alleges that this “better pricing” is, under the most generous of terms, “deliberately misleading” and likely to damage users to the tune of upward of a billion dollars.
The lawsuit looks to represent all persons in the United States who, within the applicable statute of limitations period, used the Voyager trading platform to place cryptocurrency investment orders.
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