The U.S.Commodity Futures Trading Commission (CFTC) has filed a complaint against Stephen Ehrlich, the former CEO of the now-bankrupt entities Voyager Digital Ltd, Voyager Digital Holdings, Inc., and Voyager Digital, LLC. The complaint alleges that Ehrlich committed fraud and failed to register in relation to the Voyager digital asset platform and its operation of an unregistered commodity pool.
According to the CFTC, Stephen Ehrlich and Voyager falsely promoted the platform as a “safe haven,” promising high-yield returns to entice customers to purchase and store digital asset commodities. The complaint further alleges that from February 2022 to July 2022, Ehrlich and Voyager misrepresented the safety and financial health of the platform.
They promised returns as high as 12% on certain digital assets stored on the platform. To fulfill these promises, Voyager pooled customer assets and transferred billions to high-risk third parties as “loans.”
One such risky transaction involved transferring over $650 million in customer digital assets to Firm A, a digital assets hedge fund, without adequate due diligence. This move led Voyager to operate as a commodity pool operator (CPO) without the required CFTC registration. Ehrlich also failed to register as an associated person of a CPO, despite soliciting public contributions to the Voyager Pool.
The false promises and risky transfers culminated in Voyager recalling its customer digital assets from Firm A in June 2022. Following Firm A’s default, Voyager faced severe liquidity issues. Despite these challenges, Ehrlich continued to publicly assure that customer assets were safe. However, on July 5, 2022, Voyager filed for bankruptcy, leaving a debt of over $1.7 billion to its U.S. customers.
In a parallel action, the Federal Trade Commission (FTC) also charged Ehrlich and Voyager with violations of the FTC Act and the Gramm-Leach-Bliley Act.
This case is not an isolated incident in the crypto world. Other notable legal actions have been taken against former executives of collapsed crypto platforms. For instance, FTX and Celsius Network have also faced legal scrutiny. The latest developments in these cases are still unfolding, and the crypto community is keenly watching the outcomes.
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