CFTC Charges Former Voyager CEO With Fraud

The Commodity Futures Trading Commission (CFTC) has filed a complaint against Stephen Ehrlich, the former chief executive officer of Voyager Digital Ltd., Voyager Digital Holdings, Inc., and Voyager Digital, LLC.

The complaint alleges that Ehrlich and Voyager engaged in a fraudulent scheme, misrepresenting the safety and financial health of the Voyager digital asset platform.

Ehrlich and Voyager touted their platform as a “safe haven” for customers’ digital assets, promising high-yield returns of up to 12%. However, behind the scenes, they took reckless risks with customer assets, leading to Voyager’s bankruptcy and substantial customer losses, the complaint alleges. They also allegedly operated an unregistered commodity pool by commingling customer assets and transferring billions of dollars worth of digital assets as “loans” to high-risk third parties.

The complaint goes on to claim that as a result of their actions, Voyager recalled customer assets from a risky counterparty, causing severe liquidity issues. Despite the dire situation, Ehrlich continued to falsely assert publicly that customer assets were safe. In July 2022, Voyager filed for bankruptcy, leaving customers in the United States owed over $1.7 billion.

The CFTC seeks various remedies against Ehrlich, including restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.

This case adds to the growing number of CFTC actions aimed at holding chief executive officers accountable for fraudulent operations in the digital asset space. Parallel to the CFTC’s action, the Federal Trade Commission has separately charged Ehrlich and Voyager with violating the FTC Act and the Gramm-Leach-Bliley Act.