In a recent filing, Voyager Digital has reached a $1.65 billion settlement with US regulators, making it one of the largest fines ever imposed in the crypto sector. Additionally, the firm’s former CEO, Stephen Ehrlich, is facing a lawsuit from regulators accusing him of fraudulent activities.
Two US regulatory bodies, the Federal Trade Commission (FTC) and the Commodity Futures Trading Commission (CFTC), have initiated legal actions against Stephen Ehrlich, the former CEO of Voyager. The FTC and CFTC have filed complaints in the US District Court for the Southern District of New York. While both Voyager and Ehrlich are named as defendants by the FTC, only Ehrlich is targeted by the CFTC.
The CFTC is seeking various forms of relief against Ehrlich, including restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act. The regulatory body alleges that Ehrlich deceived customers about the safety and financial stability of the Voyager digital asset platform.
The FTC alleges that deceptive claims were made by both Voyager and Ehrlich regarding Federal Deposit Insurance Corporation (FDIC) insurance. The FTC complaint includes screenshots of Voyager’s website and app advertising FDIC insurance coverage up to $250,000. However, the FTC asserts that neither Voyager nor its customer deposits were actually FDIC-insured.
FTC Settles With Voyager For $1.65 Billion Fine
In a separate development, the FTC has reached a settlement with Voyager’s corporate entity, which will pay a fine of $1.65 billion as part of the agreement. The company did not confirm or deny the allegations. Francine Ehrlich, Stephen Ehrlich’s wife, is also identified as a relief defendant in the FTC complaint.
Voyager declared bankruptcy in 2022 along with other companies following the collapse of the cryptocurrency hedge fund Three Arrows Capital. The company filed for bankruptcy protection on July 6 of that year after suspending deposits and withdrawals. Earlier this year, Voyager finalized a plan to liquidate its assets as part of a customer repayment strategy.
Hot Take: Voyager Digital Faces Record-Breaking Fine and Legal Troubles
Voyager Digital’s $1.65 billion settlement with US regulators highlights the severe consequences of alleged fraudulent activities in the crypto industry. The company’s former CEO, Stephen Ehrlich, is facing a lawsuit accusing him of misleading customers about the financial health of Voyager and falsely claiming FDIC insurance coverage.
This case serves as a reminder that regulators are actively monitoring the crypto space and are prepared to take significant action against individuals and firms that engage in deceptive practices. As the industry continues to evolve, maintaining transparency and compliance will be crucial for businesses to build trust and avoid legal troubles.
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