Monday, May 27, 2024

US Regulators Charge Ex-Voyager CEO With Fraud, False Claims. Cryptured

U.S. regulatory authorities have filed legal actions against Steve Ehrlich, the former CEO of Voyager Digital, alleging that he committed fraud and intentionally provided false information regarding government safeguards for his customers.

On Thursday, the Federal Trade Commission (FTC) and the Commodity Futures Trading Commission (CFTC) also launched related actions against Ehrlich. The CFTC also listed bitcoin and Circle’s USDC stablecoin as commodities in their court complaint.

The CFTC accused Ehrlich of defrauding customers by misrepresenting the company’s strength to them and engaging in illegal activity. According to the FTC, he misrepresented how the Federal Deposit Insurance Corp. protected the money of his clients.
“Ehrlich and Voyager lied to Voyager customers,” said Ian McGinley, the CFTC’s enforcement director, in a statement regarding the lawsuit, which seeks restitution, fines, and industry prohibitions for the former executive. While claiming to treat customers’ digital asset commodities carefully and responsibly, they secretly took astonishingly careless risks with their customers’ assets, causing Voyager to go bankrupt and suffering significant losses from clients.

The CFTC’s argument that the business should have registered as a commodities pool operator is a flawed interpretation of the law, according to one of the agency’s commissioners, Caroline Pham.

She stated in a statement that the definition of commodities pools in the enforcement action is too broad and would include normal lending activities, such as taking deposits and giving loans. This interpretation is beyond the legal authority of the enforcement action and would disrupt the well-established legal and regulatory frameworks for lending to institutions and consumers.

As it has done in previous recent cases, the CFTC also used the occasion to declare on the record which assets it views as commodities, stating that “certain digital assets are ‘commodities,’ including BTC, USDC, and others.”

Voyager was struck with a $1.65 billion judgment that was stayed to allow the business to continue its liquidation in order to repay its consumers as part of the FTC’s settlement with the company, which also permanently bars Voyager from handling customers’ assets.

In a statement, Samuel Levine, head of the FTC’s Bureau of Consumer Protection, warned businesses and people not to make flimsy claims about FDIC protection.

The crypto lender first negotiated a failed contract to sell to FTX when Voyager failed in July 2022, and then another deal to sell to Binance failed. Estimates suggest that former Voyager clients may not be able to retrieve more than 36% of their assets.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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