A CFTC Commissioner Criticizes Voyager Digital for Loss of Customer Funds
A commissioner from the Commodity Futures Trading Commission (CFTC) has strongly criticized Voyager Digital, stating that the company’s failures have resulted in the loss of billions of dollars in customer funds. Commissioner Kristen Johnson described Voyager Digital as no better than a house of cards due to its monumental mistakes, misleading practices, and lack of due diligence. The statement also accused Voyager of approving loans with high-risk third parties without conducting sufficient background checks. When one of these counterparties defaulted on repaying a loan of around $650 million in customer funds, Voyager concealed the situation from customers and continued to solicit deposits. The commissioner also highlighted Voyager’s failure to monitor its subsidiary investment firms’ use of customer funds.
Former CEO Stephen Ehrlich Faces Lawsuits
The CFTC and the Federal Trade Commission recently filed separate lawsuits against Stephen Ehrlich, the former CEO of Voyager. The CFTC lawsuit alleges fraud and registration failures related to Voyager’s platform and unregistered commodity pool. According to the lawsuit, Ehrlich and Voyager took reckless risks with customer assets, leading to bankruptcy and significant losses for customers. Meanwhile, the Federal Trade Commission reached a proposed settlement that prohibits Voyager from offering products facilitating deposits or exchanges. The settlement also requires Voyager to repay affected customers using a judgment of $1.65 billion obtained from Voyager and its affiliates.
CFTC Vows to Crack Down on Misuse of Customer Funds
CFTC Commissioner Caroline Pham has stated that the regulator will continue taking action against cryptocurrency firms that misuse customer funds. However, Pham believes that the CFTC may have exceeded its authority by interpreting certain activities as constituting a commodity pool operator. She argues that this interpretation could disrupt established legal and regulatory frameworks for lending and consumer finance. Pham has called on the CFTC to establish a cryptocurrency regulatory pilot program to address the risks faced by retail investors.
Hot Take: Voyager Digital Faces Accusations of Mismanagement and Customer Fund Losses
Voyager Digital, a cryptocurrency company, is under fire from a CFTC commissioner who accuses it of mismanaging customer funds and leading to significant losses. The commissioner’s statement describes Voyager as a “house of cards” due to its failures, misleading practices, and lack of due diligence. The former CEO of Voyager, Stephen Ehrlich, is facing lawsuits from both the CFTC and the Federal Trade Commission. The lawsuits allege fraud, registration failures, and reckless risk-taking with customer assets. Voyager has agreed to a proposed settlement that includes repaying affected customers using a judgment of $1.65 billion. The CFTC remains committed to cracking down on crypto firms that misuse customer funds but may face challenges in interpreting its authority over certain activities.
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