Key takeaways :
- CFTC Investigation: Stephen Ehrlich, co-founder of Voyager Digital, found in violation of derivatives regulations by the U.S. CFTC.
- Allegations suggest Ehrlich misled customers about asset safety, prompting the investigation into Voyager’s actions.
CFTC Investigators Conclude Voyager Digital Co-Founder Violated Rules Before Crypto Lender’s Bankruptcy.
According to a Bloomberg News report, investigators at the Commodity Futures Trading Commission (CFTC) have determined that Stephen Ehrlich, the co-founder of Voyager Digital Ltd., breached regulations in the lead-up to the crypto lender’s bankruptcy last year.
CFTC’s enforcement division staff has internally recommended pursuing allegations against Ehrlich for purportedly misleading customers regarding the security of their assets following an extensive investigation. Presently, the five CFTC commissioners are in the process of voting on whether to proceed with an enforcement action against him in the coming days, as reported by Bloomberg.
Ehrlich has expressed his frustration with the civil claims, remarking, “These allegations appear to be one of those times where the referees are making new rules and calling foul after the game has ended. I look forward to being vindicated in court.“
Ehrlich’s response underscores concerns within the crypto industry that regulatory actions may retrospectively alter the rules, raising questions about fairness and transparency.
Stephen Ehrlich is facing allegations of failing to conduct proper due diligence when lending over $650 million worth of customers’ bitcoin and U.S. dollars to Three Arrows, which was never repaid and played a role in Voyager’s financial troubles, as reported.
Separately, Voyager’s plan administrator has reached a settlement with the Federal Trade Commission (FTC) regarding claims of misrepresenting Federal Deposit Insurance Corp. (FDIC) protection availability to former customers. The FTC had initiated an investigation into Voyager, its employees, directors, and officers for alleged deceptive cryptocurrency marketing practices directed at the public.
The bankruptcy of Voyager in 2022 marked a major turning point in the cryptocurrency industry, alongside the collapse of FTX.
These events underscored the intricate web of financial connections among key players in the market. Prior to their respective downfalls, Voyager had established financial relationships with FTX, and there were even attempts to acquire Voyager during its bankruptcy proceedings, which ultimately coincided with FTX’s own collapse.
