US Regulators Sue Voyager Digital Founder for Misleading Customers and Excessive Risks
Two US regulators, the Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC), have filed lawsuits against Stephen Ehrlich, the founder of Voyager Digital. The CFTC accuses Ehrlich and his trading firm of fraud, registration failure, and operating an unregistered commodity pool. Meanwhile, the FTC alleges that Ehrlich falsely claimed that Voyager accounts are insured by the Federal Deposit Insurance Corporation (FDIC).
CFTC Accuses Voyager of Misleading Customers and Taking Excessive Risks
The CFTC commissioner, Kristin Johnson, stated that Voyager promised a “safe haven” to its customers but instead engaged in risky lending practices at the expense of customer assets. The CFTC’s director of enforcement, Ian McGinley, also accused Voyager of misleading customers by taking reckless risks with their assets.
Voyager Digital Hid Information from Customers
According to Johnson, Voyager concealed crucial information from its customers. For example, when a counterparty defaulted on repaying a $650 million loan from Voyager, the firm failed to inform its customers about it. Ehrlich continued soliciting deposits from new and existing customers while hiding Voyager’s poor financial position.
FTC Reaches Settlement with Voyager Digital
In addition to the lawsuit, the FTC has reached a settlement deal with Voyager Digital. As part of the proposed settlement, Voyager and its affiliates will be barred from handling customer assets. They will also have to pay a $1.65 billion fee.
Hot Take: US Regulators Crack Down on Misleading Practices in Crypto Industry
The lawsuits filed against Stephen Ehrlich and Voyager Digital highlight the growing regulatory scrutiny in the crypto industry. Regulators are cracking down on misleading practices and excessive risks that can harm customers and undermine trust in the market. This enforcement action serves as a warning to other players in the industry to prioritize transparency and customer protection. It also emphasizes the need for stricter regulations to prevent fraudulent activities and ensure the integrity of the crypto market.
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