In a recent report, the former chief executive of the bankrupt crypto lender Voyager Digital, Stephen Ehrlich, faced two charges for misleading customers. An October 12 report demonstrated that the Commodities and Futures Trading Commission (CFTC) filed charges against the former Voyager CEO. The CFTC blamed Ehrlich for misleading the customers on the safety of the products offered by Voyager.
Voyager Former CEO Facing Two Charges
In the filing, the CFTC alleged that Ehrlich engaged in fraud and bypassed the registration law on the products offered by the now-defunct crypto lender. The regulators accused the former executive for operating an unregistered commodity pool.
Additionally, the CFTC complaints demonstrated that Ehrlich provided false information about some of the products offered by Voyager. The regulators claimed that the CEO deceived the customers to purchase Voyager’s offering promising high returns on investment.
The CFTC blamed Ehrlich for assuring the customers a safe haven. The CFTC noted that the CEO promised the customers that some digital assets would generate 12% income on investment.
The Federal Trade Commission (FTC) filed a similar charge against Ehrlich in a separate report. The FTC accused the CEO of providing the users with false information. The regulators noted that Ehrlich claimed that the user accounts were FDIC-insured.
Ex-Voyager CEO Accused of Misleading Customers
A review of the operation of the bankrupt crypto lender demonstrated that Voyager had collaborated with an insured bank to facilitate the storage of funds. The regulators noted that Voyager and the CEO violated the FTC laws and Gramm-Leach Bliley Act.
The FTC stated that the ex-CEO engaged in misappropriation of company funds. The financial regulators tracked back the transaction made by the troubled CEO and realized that Ehrlich had transferred a measurable amount of funds to his wife.
The FTC observation echoed CFTC’s findings on the suspectible behaviour of the former CEO. The CFTC noted that the bankrupt crypto lender had transferred assets worth $650 million to an external account registered to an unnamed hedge.
The CFTC noted that the transaction was unsecured and breached the CFTC registration requirement for commodity pool operators (CPO).
Besides the lawsuit, the market regulators devised a settlement plan restricting Voyager from offering customers assets. The embattled crypto lender will be urged to provide genuine information concerning their products or services. The FTC bans Voyager from disclosing customers’ details to the public without their consent.
In an exclusive interview with Ian McGinley, the CFTC director of enforcement blamed Voyager for exposing the customer’s assets to inherent risks that led to the loss of substantial funds. The latter depicts the poor investment decision forced Voyager to file for Chapter 11 of the Bankruptcy Protection in 2022.