CFTC and FTC file charges against former Voyager Digital CEO for making false claims

The United States' Commodity Futures Trading Commission (CFTC) and Federal Trade Commission (FTC) have filed parallel charges against former crypto lending firm Voyager Digital CEO Stephen Ehrlich.

In an Oct. 12 announcement, the CFTC said it filed a lawsuit in the US District Court for the Southern District of New York against Ehrlich and Voyager over alleged fraud and “registration failures” related to the platform and an “unregistered commodity pool.” The commission said it plans to seek recusal, removal, civil monetary penalties and permanent business and registration bans.

“Ehrlich and Voyager lied to Voyager's customers,” said CFTC Enforcement Director Ian McGinley. “On their behalf, they safely and responsibly looked after clients' digital assets, while behind the scenes, they took incredibly careless risks with their clients' assets, resulting in losses for Voyager and significant client losses. As their business began to crumble, they continued to lie to their customers, hiding Voyager's true financial health.

In a parallel move, the FTC said it had reached a settlement with Voyager that “prevents it from permanently hosting users' property” and sued Ehrlich in the U.S. District Court for the Southern District of New York, saying Voyager's accounts were warranted. They were insured by the Federal Deposit Insurance Corporation (FDIC). As part of the proposed settlement, Voyager and its affiliates will pay a $1.65 billion settlement.

The FTC's complaint focused on Voyager's US dollar (USDC) deposits being insured by the FDIC. Ehrlich transferred millions from Voyager to his wife, Francine, who was named as a defendant in the FTC's settlement. Both charges center around fraudulent statements made by Ehrlich regarding Voyager's financial health in 2022.

According to Ehrlich's statement, he was “angry and very upset” by the lawsuit, adding that the Voyager team had been “constantly communicating and working closely with our supervisors.”

“I am deeply disappointed by the losses suffered by Voyager customers and creditors as a result of the behavior of others in the crypto industry. I am currently reviewing the government's claims, but it is clear that I am being used as an outlet for other nefarious activities.”

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Voyager filed for Chapter 11 bankruptcy protection in July 2022 amid the crypto market crash, with the case still ongoing at press time. In May, a bankruptcy court approved Voyager's plan to repay customers.

Both the CFTC and the FTC have pending cases against crypto firms and their executives, including ex-Celsius CEO Alex Mashinsky and ex-FTX CEO Sam Bankman-Fried, whose first criminal trial was on October 3. In July, Binance and its CEO Changpeng Zhao It has started. , the CFTC pressured the company to dismiss allegations that it offered unregistered derivatives.

Magazine: US law enforcement agencies are turning up the heat on crypto-related crimes.

Update (October 13 at 2:35 PM UTC): This article has been updated to include a statement from Stephen Ehrlich.