Voyager settles with FTC for $1.65B while CFTC charges former CEO with fraud

The U.S. Federal Trade Commission (FTC) announced connected Oct. 12 that it has reached a colony with the failed crypto lending institution Voyager Digital.

The FTC complained that Voyager falsely advertised U.S. dollar holdings arsenic FDIC-insured, promised customers that their deposits were held safely, and offered incentives for converting crypto to USDC. However, Voyager’s customers collectively mislaid entree to $1 cardinal of cryptocurrency erstwhile the institution filed for bankruptcy successful 2022.

The colony volition spot Voyager and its affiliates banned from offering and advertizing a wide scope of user fiscal services. Voyager volition wage a colony of $1.65 cardinal aft it pays creditors that are owed compensation successful its bankruptcy case.

The FTC additionally filed charges against erstwhile Voyager’s co-founder and erstwhile CEO, Steven Ehrlich, portion besides naming his woman Francine Ehrlich arsenic a alleviation defendant. Elhrich has not agreed to settle; the substance volition proceed successful court.

CEO charged separately by CFTC

The CFTC separately charged Ehrlich with fraud, registration failures, and cognition of an unregistered commodities excavation connected Oct. 12.

CFTC Director of Enforcement Ian McGinley connected the allegations to Voyager’s earlier illness and bankruptcy successful mid-2022, stating:

“Ehrlich and Voyager lied to Voyager customers … they took shockingly reckless risks with their customers’ assets, starring to Voyager’s bankruptcy and immense lawsuit losses. When their concern began to collapse, they continued lying to their customers, concealing Voyager’s existent fiscal health.”

In its relationship of events, the CFTC said that Ehrlich and his institution falsely advertised Voyager arsenic a “safe haven” for crypto deposits and advertised returns arsenic precocious arsenic 12% connected immoderate assets. But successful reality, it said, Ehrlich and Voyager loaned billions of dollars of lawsuit deposits to third-party companies to make gross for customers.

Voyager’s determination to prosecute successful those loans means that the institution acted arsenic a commodity excavation relation without CFTC registration. The CFTC added that Ehrlich did not registry arsenic an associated idiosyncratic of this excavation contempt soliciting participants.

The CFTC noted that a 3rd enactment — referred to lone arsenic “Firm A” successful the statement — defaulted connected a indebtedness erstwhile Voyager attempted to retrieve it. That result led Voyager to record for bankruptcy successful July 2022.

The regulator said that it seeks to person respective fines imposed connected Ehrlich, including restitution, disgorgement, and civilian monetary penalties. It besides aims to restrict his activities by imposing imperishable trading and registration bans, positive imperishable injunctions that volition forestall Ehrlich from violating definite commodities regulations.

The station Voyager settles with FTC for $1.65B portion CFTC charges erstwhile CEO with fraud appeared archetypal connected CryptoSlate.