The CFTC and FTC concurrently filed a lawsuit towards Voyager’s former CEO

The CFTC and FTC accused Stephen Ehrlich and the co-founder of Voyager Digital of hiding money overall health and blinding consumers.

The CFTC and FTC concurrently filed a lawsuit towards Voyager’s former CEO. Photo: Bloomberg

The CFTC costs towards Voyager’s founder

Stephen Ehrlich, co-founder of failed lending platform Voyager Digital, has been charged by the Asset Futures Trading Commission (CFTC) with fraud and concealing the company’s overall health condition.

Former Voyager CEO sued by CFTC for allegedly violating derivatives guidelines though foremost cryptocurrency loan provider https://t.co/cI6hCbKHnx

— Bloomberg Crypto (@crypto) October 12, 2023

The Oct. twelve lawsuit alleges that Ehrlich and his firm lied to consumers and until finally Voyager started to collapse, continued to hide their genuine money condition.

CFTC enforcement director Ian McGinley named for hefty fines for the former executive and an outright ban from the platform. He argued:

“Contrary to claims of ensuring the safety of customers’ digital assets, it turns out that behind the scenes they have been careless with customers’ deposits, driving them into bankruptcy and causing huge losses.”

From February 2022 to July 2022, Ehrlich and Voyager deceived the public with a excellent fraud scheme, misrepresenting Voyager’s money overall health, the commission mentioned.

Ehrlich promoted Voyager by promising higher returns, in some cases as higher as twelve%, to pool consumer money and funnel billions in loans to risky third events, the CFTC explained.

Furthermore, in the court filing, the CFTC also indirectly stated that Circle’s USDC and Bitcoin stablecoins are commodities.

Parallel FTC action

At the very same time as the CFTC’s costs, the Federal Trade Commission (FTC) issued a long term ban on the platform.

FTC Reaches Settlement With Cryptocurrency Firm Voyager Digital The FDIC vindicated the former executive with falsely claimed client deposits: https://t.co/Kgz368Hbrk /First

—FTC (@FTC) October 12, 2023

The FTC alleged that Ehrlich lied about client accounts protected by the Federal Deposit Insurance Corporation (FDIC). The FTC expects Voyager to shell out $one.65 billion in damages immediately after having to pay creditors in the bankruptcy situation. Ehrlich opposed the proposal, so the two sides are going to federal court.

The finish of Voyager

Last week, Ehrlich explained the Voyager crew worked really hard and had integrity inside of the legal framework at the time.

“I am deeply saddened by the losses that Voyager customers and creditors have suffered due to the actions of others in the cryptocurrency industry. And frankly we have all been deceived equally,” Ehrlich explained.

The common cryptocurrency loan provider filed for bankruptcy safety much more than a 12 months in the past, following a lengthy time period of turmoil in the cryptocurrency market. The economic downturn was triggered in May 2022 with the collapse of the Terra blockchain, which wiped out $forty billion from the market place. By May 2023, the bankruptcy court authorized Voyager’s client repayment strategy.

After the collapse, FTX at first made available to get the lending firm, and then Binance, but each failed. According to estimates, former Voyager consumers could not recover much more than 36% of their assets.

In addition to Voyager, the CFTC and FTC are also pursuing numerous other lawsuits, towards former Celsius CEO Alex Mashinsky and infamous former FTX CEO Sam Bankman-Fried. At the finish of July this 12 months, Binance and CEO Changpeng Zhao officially rejected the CFTC’s lawsuit.

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