The US Commodity Futures Buying and selling Fee (CFTC) and the Federal Commerce Fee (FTC) have taken authorized motion towards Stephen Ehrlich, the previous CEO of the now-bankrupt crypto platform Voyager, for his many false representations to clients.
The affirmation got here yesterday (Thursday) after the FTC settled with Voyager, imposing a everlasting ban from dealing with clients’ funds.
Steve Ehrlich, co-founder and former CEO of Voyager.
Within the lawsuit towards Ehrlich, the FTC highlighted his false claims that the Federal Deposit Insurance coverage Company (FDIC) insured the shoppers’ accounts, making a faux aura of security even when chapter was approaching. Ehrlich managed three companies: Voyager Digital Ltd., Voyager Digital Holdings, Inc., and Voyager Digital, LLC, collectively often called Voyager.
In response to the CFTC’s criticism, Ehrlich and Voyager defrauded clients by misrepresenting the security and monetary well being of the Voyager digital asset platform from at the least February 2022 by July 2022. The platform guarantees high-yield returns, as much as 12 p.c, on saved digital belongings, selling itself as a “protected heaven.” At its peak, the platform held over $2 billion of digital belongings.
A Dangerous Actuality
In actuality, the platform pooled billions of {dollars} price of consumers’ digital belongings and wrote them as loans to high-risk counterparties. In 2022, Voyager transferred over $650 million to a digital asset hedge fund on an unsecured foundation. The issue for Voyager began after the hedge fund defaulted on the request to recall the digital belongings in June 2022.
Nonetheless, it continued its false representations to the shoppers, reiterating that the digital belongings had been protected. Voyager filed for chapter on July 5, 2022, owing clients over $1.7 billion.
The CFTC has additionally charged Ehrlich for violating registration norms, as his platform operated as a commodity pool operator with out a license. It’s now searching for restitution, disgorgement, civil financial penalties, and everlasting buying and selling and registration bans.
“That is yet one more CFTC motion searching for to carry accountable a chief govt officer for his position within the fraudulent operation of a digital asset platform,” mentioned Ian McGinley, CFTC’s Director of Enforcement.
“Ehrlich and Voyager lied to Voyager clients. Whereas representing they’d deal with clients’ digital asset commodities safely and responsibly, behind the scenes, they took shockingly reckless dangers with their clients’ belongings, resulting in Voyager’s chapter and large buyer losses. When their enterprise started to break down, they continued mendacity to their clients, concealing Voyager’s true monetary well being. Amplifying their fraud, Ehrlich and Voyager broke their belief with clients whereas appearing in capacities that required CFTC registration, which they did not get hold of.”
The US Commodity Futures Buying and selling Fee (CFTC) and the Federal Commerce Fee (FTC) have taken authorized motion towards Stephen Ehrlich, the previous CEO of the now-bankrupt crypto platform Voyager, for his many false representations to clients.
The affirmation got here yesterday (Thursday) after the FTC settled with Voyager, imposing a everlasting ban from dealing with clients’ funds.
Steve Ehrlich, co-founder and former CEO of Voyager.
Within the lawsuit towards Ehrlich, the FTC highlighted his false claims that the Federal Deposit Insurance coverage Company (FDIC) insured the shoppers’ accounts, making a faux aura of security even when chapter was approaching. Ehrlich managed three companies: Voyager Digital Ltd., Voyager Digital Holdings, Inc., and Voyager Digital, LLC, collectively often called Voyager.
In response to the CFTC’s criticism, Ehrlich and Voyager defrauded clients by misrepresenting the security and monetary well being of the Voyager digital asset platform from at the least February 2022 by July 2022. The platform guarantees high-yield returns, as much as 12 p.c, on saved digital belongings, selling itself as a “protected heaven.” At its peak, the platform held over $2 billion of digital belongings.
A Dangerous Actuality
In actuality, the platform pooled billions of {dollars} price of consumers’ digital belongings and wrote them as loans to high-risk counterparties. In 2022, Voyager transferred over $650 million to a digital asset hedge fund on an unsecured foundation. The issue for Voyager began after the hedge fund defaulted on the request to recall the digital belongings in June 2022.
Nonetheless, it continued its false representations to the shoppers, reiterating that the digital belongings had been protected. Voyager filed for chapter on July 5, 2022, owing clients over $1.7 billion.
The CFTC has additionally charged Ehrlich for violating registration norms, as his platform operated as a commodity pool operator with out a license. It’s now searching for restitution, disgorgement, civil financial penalties, and everlasting buying and selling and registration bans.
“That is yet one more CFTC motion searching for to carry accountable a chief govt officer for his position within the fraudulent operation of a digital asset platform,” mentioned Ian McGinley, CFTC’s Director of Enforcement.
“Ehrlich and Voyager lied to Voyager clients. Whereas representing they’d deal with clients’ digital asset commodities safely and responsibly, behind the scenes, they took shockingly reckless dangers with their clients’ belongings, resulting in Voyager’s chapter and large buyer losses. When their enterprise started to break down, they continued mendacity to their clients, concealing Voyager’s true monetary well being. Amplifying their fraud, Ehrlich and Voyager broke their belief with clients whereas appearing in capacities that required CFTC registration, which they did not get hold of.”
