- Two regulators have targeted Voyager’s ex-CEO with lawsuits.
- The former exec has chosen litigation over settlement.
- Voyager has agreed to a settlement.
Former Voyager Digital CEO and Co-Founder Stephen Ehrlich is the target of parallel lawsuits filed by two U.S. regulators, with both accusing the executive and his affiliated companies of misleading customers and deliberately misrepresenting their government protections.
The development comes as part of ongoing investigations into Voyager alongside its leadership after the crypto asset brokerage firm filed for Chapter 11 bankruptcy protection amid the 2022 market downturn.
FTC in Action
On October 12, the Federal Trade Commission (FTC) announced that it was filing a lawsuit against Ehrlich for allegedly violating the FTC Act’s prohibition on deceptive practices and the Gramm-Leach-Bliley Act’s prohibition on obtaining a customer’s financial information through false, fictitious, or fraudulent statements.
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Per the FTC, in a June 2022 letter, Ehrlich misrepresented to Voyager customers that their deposits were insured by the Federal Deposit Insurance Corporation (FDIC) and were “safe,” only for the company to freeze consumers’ access to their accounts two weeks letter.
“The complaint also alleges that Stephen Ehrlich transferred millions of dollars to his wife Francine, including funds that can be traced directly to the alleged unlawful conduct.” The statement read.
In addition to charging Ehrlich, the FTC settled with Voyager, permanently banning the company from offering, marketing, promoting, or handling customer deposits. As part of the agreement, Voyager agreed to a judgment of $1.65 billion, which has been suspended to allow the company to make its customers whole.
But that is not all against the former executive and his fallen company; the CFTC also came out swinging.
The CFTC Lawsuit
In a parallel action, the Commodity Futures Trading Commission (CFTC) announced fraud and registration failure charges against Ehrlich, alleging that the former exec oversaw Voyager’s operation of an unregistered commodity pool.
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Notably, the CFTC accuses Ehrlich of falsely touting the Voyager platform as a “safe haven” for earning high-yield returns, a misrepresentation that induced customers to purchase and store digital assets with the company.
Despite confirming the charges, Commissioner Caroline Pham dissented from the regulatory action, arguing that the CFTC’s position that Voyager should have registered as a commodity pool operator is a flawed interpretation of the law.
Read more about Voyager’s initial recovery plan for customers:
Voyager Pledges 35.72% of Holdings to Customers in Initial Recovery
Read to stay updated on factual news:
Beware of Fake News: BlackRock Not Buying Voyager Digital
