US CFTC Commissioner Criticizes Voyager Digital for Mishandling Customer Funds
In a statement on October 12, Commissioner Kristin Johnson of the United States Commodity Futures Trading Commission (CFTC) criticized Voyager Digital for its misleading practices and lack of due diligence, which resulted in the loss of billions of dollars of customer funds. She accused the company of turning a blind eye to its subsidiary investment firms’ activities with customer assets and failing to demand transparency from these firms. The CFTC, along with the Federal Trade Commission, filed lawsuits against Voyager’s former CEO Stephen Ehrlich for fraud and registration failures.
FTC Settlement and Repayment
The Federal Trade Commission reached a proposed settlement with Voyager, prohibiting the firm from offering any product or service related to asset deposit, exchange, investment, or withdrawal. Meanwhile, Voyager and its affiliates agreed to a $1.65 billion judgment that will be used to repay customers in bankruptcy proceedings.
CFTC’s Continued Action Against Misuse of Customer Funds
CFTC Commissioner Caroline Pham stated that the regulator will continue pursuing action against cryptocurrency firms that misuse customer funds. However, she expressed concern about the CFTC’s interpretation of what constitutes a commodity pool operator, believing it may exceed their statutory authority and disrupt existing legal frameworks for lending. Pham previously called for the establishment of a cryptocurrency regulatory pilot program to address risks faced by retail investors.
Bankruptcy Filing and Withdrawals
Voyager filed for Chapter 11 bankruptcy in July 2022, revealing potential debts ranging from $1 billion to $10 billion owed to over 100,000 creditors. The cryptocurrency brokerage firm allowed customer withdrawals in June.
Hot Take: US CFTC Commissioner Slams Voyager Digital for Mishandling Customer Funds
US CFTC Commissioner Kristin Johnson strongly criticized Voyager Digital for its misleading practices and failure to protect customer funds. The regulator’s lawsuits against Voyager’s former CEO highlight allegations of fraud and registration failures. While the FTC reached a proposed settlement with Voyager, banning the firm from certain activities, the CFTC will continue taking action against cryptocurrency firms misusing customer funds. However, Commissioner Caroline Pham raised concerns about the CFTC’s interpretation of its authority, suggesting it may disrupt existing legal frameworks. Voyager’s bankruptcy filing and subsequent customer withdrawals further underscore the challenges faced by the company and its customers.
By
By
By
By
By