Former CEO of Voyager Faces Possible Enforcement Action by U.S. Regulators
The former CEO of bankrupt crypto lender Voyager, Stephen Ehrlich, is under consideration for enforcement action by U.S. regulators, according to sources familiar with the matter. The U.S. Commodity Futures Trading Commission’s (CFTC) Enforcement Division has recommended charging Ehrlich after investigating Voyager’s actions. Voyager recently resumed withdrawals after a pause.
CFTC Alleges Misleading Customers
The CFTC alleges that Ehrlich violated rules by misleading customers about the security of their assets. The regulatory agency is contemplating fines and other penalties in response to the alleged misconduct, although not all investigations result in enforcement actions. The decision on whether to approve enforcement actions against Ehrlich is pending a vote from CFTC commissioners.
Information Requested During Bankruptcy Case
Voyager made headlines in 2022 when it disclosed that the CFTC had requested information related to its operations and customer interactions as part of its bankruptcy case. At the time of the bankruptcy filing, Ehrlich had not been formally accused of any wrongdoing. In response to the impending civil lawsuits, Ehrlich expressed frustration and stated his intention to vigorously contest the allegations.
Transfers to High-Risk Entities
During Ehrlich’s tenure as CEO, Voyager reportedly transferred hundreds of millions of dollars to high-risk entities such as Three Arrows Capital and Alameda Research, both cryptocurrency hedge funds. The CFTC’s investigation revealed that Ehrlich failed to conduct proper due diligence before lending over $650 million worth of Bitcoin and U.S. dollars to Three Arrows Capital, which ultimately filed for bankruptcy.
Hot Take: Former CEO of Voyager Faces Regulatory Action
Stephen Ehrlich, the former CEO of Voyager, is facing the possibility of enforcement action by U.S. regulators. The CFTC alleges that Ehrlich misled customers and violated rules regarding asset security. While not all investigations result in enforcement actions, the CFTC is considering fines and penalties in response to the alleged misconduct. Ehrlich’s transfers of substantial sums to high-risk entities have also come under scrutiny. This development follows Voyager’s disclosure of information requested by the CFTC during its bankruptcy case. Ehrlich has expressed frustration and plans to vigorously contest the accusations brought against him.
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