Former Voyager CEO Faces Lawsuit for Misleading Customers
The Commodities and Futures Trading Commission (CFTC) has filed a lawsuit against Stephen Ehrlich, the former CEO of Voyager Digital, accusing him of misleading customers about the safety of their assets. The CFTC alleges that Ehrlich committed fraud and failed to register the platform as an “unregistered commodity pool,” a classification that applies to cryptocurrencies like Bitcoin.
The CFTC claims that Ehrlich and Voyager falsely promoted the platform as a “safe haven” for earning high-yield returns, enticing customers to purchase and store digital asset commodities. The agency is seeking permanent registration and trading bans on Ehrlich, as well as restitution, disgorgement, and civil monetary penalties. Voyager filed for bankruptcy in July, leaving U.S. customers and creditors owed $1.7 billion.
Federal Trade Commission Charges Ehrlich for Misrepresentations
In a parallel action, the Federal Trade Commission (FTC) has charged Ehrlich with similar misrepresentations and falsely claiming that customer accounts were FDIC insured. Before its collapse, Voyager promised customers yields of up to 12% on their assets and transferred them to high-risk third parties.
The CFTC alleges that Voyager transferred $650 million in pooled customer assets to an unnamed hedge fund without proper registration. The reckless actions of Ehrlich and Voyager led to the company’s bankruptcy and significant customer losses, according to Director of Enforcement Ian McGinley.
Regulatory Crackdown on Crypto Firms
The charges against Ehrlich are part of a series of enforcement actions by U.S. regulators against crypto firms in recent years. Competing platforms such as Celsius, Voyager, and BlockFi have faced scrutiny from regulators after causing billions of dollars in losses for investors.
Crypto exchanges FTX and Binance.US had plans to acquire Voyager but abandoned the deals. Both exchanges are now facing lawsuits from the CFTC and other entities for illegal commodities trading operations.
Hot Take: Former Voyager CEO Faces Lawsuit for Misleading Customers
Stephen Ehrlich, the former CEO of Voyager Digital, is facing legal action from the Commodities and Futures Trading Commission (CFTC) for allegedly misleading customers about the safety of their assets. The CFTC accuses Ehrlich of fraud and failure to register as an “unregistered commodity pool.” This lawsuit adds to the growing number of enforcement actions against crypto firms by U.S. regulators. The collapse of platforms like Voyager has resulted in significant losses for both institutional and retail investors. It remains to be seen how these legal battles will impact the broader crypto industry and its reputation among investors.
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