Former Voyager CEO Accused of Fraud and False Statements by US CFTC

Ex-Voyager CEO Allegedly Charged with Fraud and Making False Statements by US CFTC

Author: Jesse Hamilton, CoinDesk; Translation: Song Xue, LianGuai

The US regulatory agency has filed a lawsuit against former Voyager Digital CEO Steve Ehrlich, accusing him of involvement in fraud and intentionally distorting his clients’ government protection measures.

The Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC) announced the actions against Ehrlich on Thursday, with the CFTC also categorizing Circle’s USDC stablecoin and Bitcoin as commodities in its court filings.

The CFTC accuses Ehrlich of deceiving customers by misleading them about the strength of the company and conducting business without proper registration. The Federal Trade Commission (FTC) states that he falsely claimed that customers’ funds were protected by the Federal Deposit Insurance Corporation.

• Trial Transcript The Road to FTX’s Collapse – Binance, Hacker Mole, VC Blood Loss
• LianGuai Morning News | CZ’s tweet causes FTX to collapse, US CFTC sues Voyager Digital co-founder
• Marathon Digital: Plunging in the Bitcoin Abyss

“Ehrlich and Voyager lied to customers,” said Ian McGinley, the Executive Director of the CFTC, in a statement about the lawsuit. The lawsuit seeks compensation, penalties, and industry bans for the former executive. “While they claimed to treat customers’ digital asset commodities safely and responsibly, behind the scenes, they took shocking risks with customers’ assets, leading to Voyager’s bankruptcy and huge losses for customers.”

However, one of the agency’s commissioners, Caroline Pham, believes that the CFTC’s stance that the company should register as a commodity pool operator is a misinterpretation of the law.

In a statement on Thursday, the enforcement action defines commodity pools as “seemingly encompassing commonplace lending activities, such as accepting deposits and providing loans.” She said, “This interpretation exceeds our statutory authority and would disrupt mature legal and regulatory frameworks for institutional and consumer finance.”

The CFTC also takes this opportunity to record assets it considers commodities – as it has done in recent other cases – stating that “certain digital assets are ‘commodities,’ including BTC, USDC, and others.”

The FTC has also reached a settlement agreement with the company, permanently barring Voyager from handling customer assets and imposing a $1.65 billion judgment against it, which is stayed to allow the company to continue disbursing funds to customers.

FTC Consumer Protection Bureau Director Samuel Levine said in a statement, “This action serves as a reminder to businesses and individuals: don’t act recklessly when claiming FDIC insurance.”

Following Voyager’s bankruptcy in July 2022, the cryptocurrency lending company first attempted a deal with FTX, but it was unsuccessful. Another sale arrangement with Binance also fell through. It is estimated that former Voyager customers will recover no more than 36% of their assets.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!