CFTC sues Voyager Digital's former chief for fraud
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Aïda Amer/Axios
The U.S. commodities regulator has sued the former chief executive of crypto lender Voyager Digital for fraud.
Why it matters: The Commodity Futures Trading Commission today alleged that Stephen Ehrlich "fraudulently solicited participation in and operated" Voyager in a way that led to its bankruptcy in July 2022, owing U.S. customers over $1.7 billion.
What they're saying: "Behind the scenes, at Ehrlich's direction and approval, Voyager took excessive risks with customer assets," according to the CFTC complaint.
- The regulator is seeking restitution, civil monetary penalties, disgorgement, as well as a permanent trading ban.
Zoom in: FTX and Alameda Research appear to have gotten a covert mention in the complaints as "Firm A" and "Firm B."
- The CFTC alleges that Voyager made significant transfers to "high-risk" third-parties to fund its Rewards Program, which enticed customers with promises of returns.
- "As part of this practice, undisclosed to its customers, Voyager conveyed pooled customer assets to counterparties at high risk of default, including Firm A (now bankrupt), Firm B (the now-bankrupt trading arm of a now-bankrupt digital asset trading platform), Firm C (now bankrupt), and Firm D (now bankrupt)."
Flashback: Voyager got a mention in Sam Bankman-Fried's criminal trial in New York this week — former Alameda Research CEO Caroline Ellison testified Wednesday that in June of 2022, Alameda had in the ballpark of $4 billion in third-party loans.
- The biggest of them were Genesis (now bankrupt), BlockFi (now bankrupt) and Voyager (now bankrupt).
Of note: The Federal Trade Commission also on Thursday settled with Voyager, banning the bankrupt exchange from handling customer assets.
- It filed suit against Ehrlich for falsely claiming that customer accounts were insured by the Federal Deposit Insurance Corporation.
Go deeper: Voyager Digital customers feeling the pain
