CTFC Sues Former CEO of Voyager Digital for Multiple Fraud Charges

Stephen Ehrlich, co-founder and former CEO of the now-defunct Voyager Digital is facing legal action from the U.S. Commodity Futures Trading Commission (CFTC) in a New York federal court. 

As per recent reports, the CFTC alleges that Ehrlich, during his tenure as CEO, engaged in fraudulent activities by enticing individuals to participate in and manage a digital asset trading and custody platform. The consequences of these actions resulted in the platform’s bankruptcy and staggering customer losses amounting to $1.7 billion. 

Details of CFTC’s Lawsuit

The regulatory body has raised multiple charges against the company, accusing it of both fraud and registration failures in connection to its operation of an unregistered commodity pool. Furthermore, the CFTC alleges that Voyager Digital and its former CEO attracted customers with enticing promises, such as potential returns as high as 12% on specific cryptocurrency holdings.

Likewise, the company is accused of disseminating misleading information regarding the safety and security of its trading platform. The legal proceedings shed light on the intricacies of Ehrlich’s role in the demise of Voyager Digital. The CFTC contends that his actions not only led to financial ruin for the platform but also resulted in substantial losses for unsuspecting customers.

Meanwhile, the lawsuit underscores the importance of regulatory compliance and transparency in the burgeoning digital asset industry. It serves as a cautionary tale, emphasizing the need for robust regulatory oversight to protect investors and maintain the integrity of the evolving digital asset landscape.

Voyager Digital’s Troubled Journey

Earlier in July 2022, the crypto lender filed for Chapter 11 bankruptcy protection in the Southern District of New York. At the time, it said the move would allow users access to their funds again. Voyager’s woes are a result of the prolonged bearish fall of the crypto market, coupled with the inability of Three Arrows Capital (3AC) to pay back its loan.

Recall that, cryptocurrency exchange FTX proposed a buyout deal to give early liquidity to Voyager’s bankruptcy investors. However, the bankrupt crypto lender said the deal would harm its customers as there was nothing to gain from the agreement.

Voyager Digital Customers Finally Get Access to Their Funds

As reported a few months ago, the cryptocurrency brokerage is ready to relaunch its app and enable users to finally withdraw their money.

According to the lender, customers will get the initial 35.72% of their claims under the bankruptcy plan, which was first granted in court on May 17, either in cash or cryptocurrency via the Voyager app.