Former Voyager CEO Steven Ehrlich faces charges from both agencies.
The U.S. Federal Trade Commission (FTC) announced on October 12 that it had reached a settlement with the collapsed cryptocurrency lending company Voyager Digital.
The FTC complained that Voyager falsely advertised that its U.S. dollar holdings were FDIC insured, promised customers that their deposits were safely held, and offered incentives to convert cryptocurrencies into USDC. However, when the company filed for bankruptcy in 2022, Voyager’s customers collectively lost $1 billion worth of cryptocurrency.
Under the settlement, Voyager and its affiliates will be prohibited from offering a wide range of consumer financial services and advertising. Voyager will pay $1.65 billion in the settlement after paying restitution to creditors owed in the bankruptcy case.
The FTC also filed charges against former Voyager co-founder and former CEO Steven Ehrlich, while also naming his wife, Francine Ehrlich, as a relief defendant. Ehrlich has not yet agreed to a settlement; the matter will proceed in court.
CEO charged separately by CFTC
On October 12, the CFTC separately charged Ehrlich with fraud, registration failure, and operating an unregistered commodities pool.
CFTC Enforcement Director Ian McGinley linked the charges to Voyager’s earlier collapse and bankruptcy in mid-2022, saying:
"Ehrlich and Voyager lied to Voyager customers...They took shockingly reckless risks with their customers' assets, resulting in Voyager's bankruptcy and massive customer losses. As their business began to collapse, they continued to lie to their customers about Voyager's true financial condition."
The CFTC said in its description of the incident that Ehrlich and his company falsely promoted Voyager as a "safe haven" for cryptocurrency deposits and advertised returns of up to 12% on certain assets. But in reality, Ehrlich and Voyager loaned billions of dollars in customer deposits to third-party companies to generate income for customers.
Voyager’s decision to engage in these loans meant the company acted as a commodity pool operator without CFTC registration. The CFTC added that despite recruiting participants, Ehrlich did not register as an associate of the pool.
The CFTC noted that when Voyager attempted to collect on the loan, the third party (referred to only as “Company A” in the statement) defaulted on the loan. This outcome led Voyager to file for bankruptcy in July 2022.
Ehrlich denied the allegations:
"I am both angry and deeply frustrated by the government's claims. Voyager's talented management team has built and maintained our platform in full compliance with existing regulatory structures. Our team has always been in communication and working closely with regulators. I am deeply troubled by the losses that Voyager's customers and creditors have suffered as a result of the actions of others in the crypto industry. I am currently reviewing the government's claims, but it is clear that I have been used as a scapegoat for the bad behavior of others. I look forward to being vindicated in court."
The regulator said it seeks multiple penalties against Ehrlich, including restitution, disgorgement of ill-gotten gains and civil penalties. It also seeks to restrict his activities by imposing permanent trading and registration bans and a permanent injunction preventing Ehrlich from violating certain commodities regulations. #监管 #Voyager
