CFTC Files Charges Against Voyager Digital CEO, Alleges Massive Fraud

Voyager Digital, now bankrupt as part of the crypto collapse of 2022, is in the news once again as the Commodities Futures Trading Commission (CFTC) has filed charges against its former CEO, Stephen Ehrlich. The CFTC is alleging fraud regarding a commodity pool ploy.

In a parallel action, the Federal Trade Commission (FTC) has charged Ehrlich and Voyager with violating the FTC Act and the Gramm-Leach-Bliley Act.

The Voyager website is currently in use as part of the bankruptcy process.

Voyager was mortally wounded by the Three Arrows Capital (3AC) collapse as the crypto hedge fund had taken out a whopping $650 million loan from Voyager. This completely obliterated the firm. At one point before its final gasps, FTX indicated it would step in and save the firm, but that did not go so well.

The CFTC complaint charges Ehrlich with fraud and registration failures pertaining to Voyager’s operation of an unregistered commodity pool. Ehrlich and Voyager falsely touted the Voyager platform as a “safe haven” to earn high-yield returns to induce customers to purchase and store digital asset commodities.

The CFTC complaint claims that Ehrlich and Voyager plotted to defraud customers by misrepresenting the safety and financial health of the Voyager digital asset platform.  The defendants allegedly touted Voyager as a “safe haven” on social media in and that Voyager would operate with the “same level of rigor and trust” as a traditional financial institution. They also promised high-yield returns on certain digital asset commodities stored on the Voyager platform.

The CFTC states:

“To generate income to pay its customers the promised returns, Ehrlich and Voyager pooled customer assets stored on the Voyager platform and transferred billions of dollars’ worth of customers’ digital asset commodities as “loans” to high-risk third parties. In early 2022, following grossly inadequate due diligence, Ehrlich and Voyager transferred over $650 million in customer digital asset commodities to Firm A (a digital assets hedge fund) on an unsecured basis, with the understanding that Firm A would generate returns for Voyager by pooling Voyager’s investment and trading commodity interests. In so doing, Voyager operated the Voyager Pool and acted as a commodity pool operator (CPO) without the required CFTC registration.”

CFTC Director of Enforcement Ian McGinley said this is another enforcement action holding people accountable for the fraudulent operation of a digital asset platform.

“Ehrlich and Voyager lied to Voyager customers. While representing they would treat customers’ digital asset commodities safely and responsibly, behind the scenes, they took shockingly reckless risks with their customers’ assets, leading to Voyager’s bankruptcy and huge customer losses. When their business began to collapse, they continued lying to their customers, concealing Voyager’s true financial health. Amplifying their fraud, Ehrlich and Voyager broke their trust with customers while acting in capacities that required CFTC registration, which they failed to obtain.”

The CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of CFTC regulations.

The FTC has settled with Voyager that will permanently ban it from handling consumers’ assets. The FTC complaint also names Ehrlich’s wife, Francine Ehrlich, as a relief defendant.

Register Now!
Sponsored Links by DQ Promote



Send this to a friend