The United States Commodity Futures Trading Commission (CFTC) and Federal Trade Commission (FTC) have filed parallel lawsuits against Stephen Ehrlich, the former CEO of crypto lending agency Voyager Digital.
In an Oct. 12 announcement, the CFTC said it had filed a lawsuit in U.S. District Court for the Southern District of New York against Ehrlich and Voyager for alleged fraud and “registration failures” linked to the platform and its “unregistered commodity pool”. The fee stated it deliberate to hunt restitution, disgorgement, civil financial penalties, and everlasting buying and selling and registration bans.
“Ehrlich and Voyager lied to Voyager customers,” stated CFTC enforcement director Ian McGinley. “While representing they would treat customers’ digital asset commodities safely and responsibly, behind the scenes, they took shockingly reckless risks with their customers’ assets, leading to Voyager’s bankruptcy and huge customer losses. When their business began to collapse, they continued lying to their customers, concealing Voyager’s true financial health.”
In a parallel motion, the FTC said it had reached a settlement with Voyager “that will permanently ban it from handling consumers’ assets” and filed a lawsuit in U.S. District Court for the Southern District of New York against Ehrlich for claiming that Voyager accounts insured by the Federal Deposit Insurance Corporation (FDIC) and have been “safe”. As a part of the proposed settlement, Voyager and its associates pays a $1.65 billion payment.
The FTC’s grievance targeted on Voyager claiming USD Coin (USDC) deposits have been insured by the FDIC. Ehrlich allegedly transferred hundreds of thousands of {dollars} in funds from Voyager to his spouse Francine, who was named as a reduction defendant within the FTC case. Both lawsuits centered round allegedly fraudulent statements made by Ehrlich with regard to Voyager’s monetary well being in 2022.
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Voyager filed for Chapter 11 chapter safety in July 2022 amid the crypto market downturn, with the case nonetheless ongoing on the time of publication. In May, the chapter courtroom approved Voyager’s plan to repay prospects.
Both the CFTC and FTC have instances pending against crypto companies and their executives, together with former Celsius CEO Alex Mashinsky and former FTX CEO Sam Bankman-Fried, whose first legal trial began on Oct. 3. In July, Binance and its CEO, Changpeng Zhao, pushed for the CFTC to dismiss a lawsuit alleging the corporate supplied unregistered derivatives merchandise.
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