Former Voyager CEO Slammed with Lawsuit from Each of CFTC and FTC Over Fraud

The Federal Trade Commission (FTC) and the United States Commodity Futures Trading Commission (CFTC) Both have filed a lawsuit against the former CEO of lending platform Voyager. Each lawsuit claims that Steve Ehrlich conducted fraudulent activities and was disloyal to government customer protections.

FTC lawsuit against Voyager

on Thursday Press releaseThe FTC said it was suing Ehrlich for “falsely claiming that customers’ accounts were insured by the Federal Deposit Insurance Corporation (FDIC).” The FTC claims that Ehrlich continued to mislead customers about the safety of their funds, even when it was clear that the company was approaching bankruptcy.

The indictment says that from at least 2018 until Voyager declared bankruptcy in July 2022, the company lured consumers into believing their funds were safe. However, when the company shut down users lost more than $1 billion worth of crypto assets, which included college tuition funds, home down payments, and salary deposits. Users were locked out of their accounts for over a month.

According to the FTC, Voyager encouraged users to convert their funds into USD coins, promising that “your USD is FDIC insured.” However, since Voyager is neither a bank nor a financial institution, customer deposits were not eligible for FDIC insurance. Furthermore, the FDIC does not insure crypto assets. All funds were in a Voyager account controlled at a traditional bank.

The FTC also announced a settlement that permanently bans Voyager from handling consumer assets. It said:

“The proposed settlement with Voyager and its affiliates will permanently prohibit the companies from offering, marketing or promoting any product or service that can be used to deposit, exchange, invest or withdraw any assets. May go.”

Voyager and its partners have also agreed to a $1.65 billion judgment. However, the FTC has suspended it to allow the company to return assets to consumers.

cftc complaint

One Announcement The disclosure was made in a complaint filed by the CFTC in the US District Court for the Southern District of New York. The CFTC is accusing Ehrlich of fraud and registration failures. According to the release, Voyager failed to properly register the operation of an unregistered commodity pool. The publication also noted the fallacy of promoting Voyager as a “safe haven” where users can earn high returns.

According to CFTC Enforcement Director Ian McGinley, Ehrlich and Voyager lied to customers and assured them of safe practices. However, the CFTC says management took “shockingly reckless risks” with user funds, which ultimately led to bankruptcy. The release continued:

“As his business began to collapse, he continued to lie to his customers, concealing Voyager’s true financial condition. Compounding their fraud, Ehrlich and Voyager breached the trust of clients by acting in capacities requiring CFRT registration, which they failed to obtain.

The CFTC said Ehrlich and Voyager pooled client assets and transferred billions of dollars to “high-risk third parties.” After failing to conduct due diligence, Ehrlich and Voyager transferred more than $650 million in client funds to a firm that would generate returns. By June, Voyager tried to withdraw its funds from the firm, but was unsuccessful. Although this created liquidity problems, Ehrlich continued to assure customers that the funds were safe.

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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip down the secrets of crypto stories to the basics so that anyone anywhere can understand without too much background knowledge. When Tolu is not deeply immersed in crypto stories, he enjoys music, loves to sing and is an avid film buff.