Voyager Digital was ‘no better than a house of cards’ — CFTC commissioner


A commissioner for the United States Commodity Futures Trading Commission has slammed Voyager Digital for its errors that finally led to the loss of billions of {dollars} in buyer funds.

In an Oct. 12 assertion, Commissioner Kristin Johnson took aim at Voyager for deceptive practices, ignoring warning indicators and “bare-bones due diligence,” which did not shield clients.

“Because of Voyager’s failures, the company became no better than a house of cards.”

The commodities commissioner stated Voyager turned a blind eye to what its subsidiary funding corporations had been doing with its personal buyer funds:

“It is astounding that Voyager failed to exert pressure on the firms where it invested its customers’ assets.”

“Instead of demanding that investment firms that received customer assets offer greater levels of transparency, Voyager shirked the long-established expectations for custodians and simply dispatched customer funds with little effort to preserve the same,” she added.

Johnson’s feedback got here after the regulator, together with the Federal Trade Commission, filed parallel lawsuits against Voyager’s former CEO, Stephen Ehrlich on Oct. 12.

The CFTC lawsuit alleges Ehrlich and Voyager performed fraud and “registration failures” over its platform and its “unregistered commodity pool.”

The FTC, then again, reached a proposed settlement with Voyager, banning the agency from providing, advertising and marketing or selling any services or products that might be used to deposit, trade, make investments or withdraw any property, according to an Oct. 12 assertion.

Voyager and its associates agreed to a judgment of $1.65 billion, which is able to go towards repaying clients within the chapter proceedings.

Meanwhile, a separate Oct. 12 statement from CFTC Commissioner Caroline Pham stated the regulator will proceed to pursue motion towards cryptocurrency corporations that misuse buyer funds:

“There is a significant difference between managing investor money for the purpose of trading derivatives, and taking deposits and providing loans to others. Without financing and consumer credit, our economy would grind to a halt.”

Related: CFTC issues $54M default judgment against trader in crypto fraud scheme

However, Pham thinks the CFTC might have stepped outdoors the bounds of its authority in decoding what constitutes a commodity pool operator:

“Such an interpretation is an overreach beyond our statutory authority and would disrupt well-established legal and regulatory frameworks for lending to institutions and consumer finance.”

On Sept. 7, Pham referred to as for the CFTC to ascertain a cryptocurrency regulatory pilot program that may handle the dangers retail traders face.

Voyager filed for Chapter 11 bankruptcy in July 2022, the place it indicated that it might owe wherever between $1 billion and $10 billion in property to extra than 100,000 collectors.

The cryptocurrency brokerage agency opened withdrawals for customers in June.

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