The Commodity Futures Trading Commission charged former Voyager Digital CEO Stephen Ehrlich Thursday with fraud and registration failures.
Ehrlich and Voyager pushed the Voyager platform as a “safe haven” for customers to earn high-yield returns. According to the CFTC, such claims were false.
“This is yet another CFTC action seeking to hold accountable a chief executive officer for his role in the fraudulent operation of a digital asset platform,” said Director of Enforcement Ian McGinley in a prepared statement.
“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,” McGinley said. “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 filed the complaint in the U.S. District Court for the Southern District of New York, the same district where former FTX CEO Sam Bankman-Fried is standing trial for alleged fraud.
FTX made a bid to buy Voyager in September 2022 following Voyager’s bankruptcy. The deal fell through following FTX’s own bankruptcy filing, and a future deal with Binance.US turned out to be doomed as well. Following Binance.US’s termination of its planned Voyager acquisition, Voyager said it would proceed to return crypto and cash directly to customers through the Voyager platform.
On Thursday, CFTC Commissioner Kristin Johnson called Voyager “no better than a house of cards.”
Separately, the Federal Trade Commission reached a $1.65 billion settlement Thursday with Voyager, permanently banning it from handling consumer assets.
The judgment will be suspended to allow Voyager to return the remaining assets to customers in its ongoing bankruptcy proceedings.
The FTC also filed a suit against Ehrlich and his wife Francine Ehrlich for claiming that customer accounts were “safe” and insured by the Federal Deposit Insurance Corp.
Ehrlich has not agreed to a settlement and the case against him will move forward in federal court, the FTC said.