Former CEO of Voyager Digital Charged with Fraud by CFTC
The U.S. Commodity Futures Trading Commission (CFTC) has taken legal action against Stephen Ehrlich, the former CEO of Voyager Digital, a bankrupt cryptocurrency lender. The CFTC filed a lawsuit accusing Ehrlich of fraud and registration failures related to Voyager’s operation of an unregistered commodity pool. The regulator claims that Ehrlich and the company falsely advertised Voyager as a “safe haven” with high-yield returns to attract investors. However, behind the scenes, they took reckless risks with customers’ assets, leading to Voyager’s bankruptcy and significant customer losses.
Improper Transfer of Customers’ Assets
The CFTC alleges that Ehrlich and Voyager pooled and transferred billions of dollars’ worth of customers’ digital assets as loans to high-risk third parties. They provided an example where over $650 million was transferred to a digital assets hedge fund without proper due diligence. This risky behavior ultimately led to Voyager filing for bankruptcy in July 2022 and causing U.S. customer losses of $1.7 billion.
Fraudulent Claims and Lawsuits
In addition to the CFTC lawsuit, the Federal Trade Commission (FTC) also sued Ehrlich for falsely claiming that customers would be protected by Federal Deposit Insurance for their assets. The FTC charged him and Voyager with violating the FTC Act and the Gramm-Leach-Bliley Act. Ehrlich denies these allegations and blames others in the industry for the losses suffered by Voyager’s customers and creditors.
Hot Take: Allegations of Fraud Against Former CEO of Voyager Digital
The former CEO of Voyager Digital, Stephen Ehrlich, is facing legal action from both the CFTC and FTC for his alleged involvement in fraudulent activities. The CFTC accuses Ehrlich and Voyager of luring investors with false promises of high-yield returns while breaking derivatives rules. Meanwhile, the FTC claims that Ehrlich made deceptive claims about asset protection. These allegations highlight the importance of regulatory oversight in the cryptocurrency industry to protect investors and prevent fraudulent activities. It remains to be seen how these legal proceedings will unfold and what impact they will have on the future of Voyager Digital.
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