US CFTC Reportedly Considering Enforcement Action Against Former Voyager CEO

Author

Jai Pratap

Author

Jai Pratap

About Author

Jai serves as the Asia Desk Editor for Cryptonews.com, where he leads a diverse team of international reporters. Jai has over five years of experience covering the web3 industry.

Author Profile

Share

Copied

Last updated: 

October 6, 2023

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

U.S. regulators are currently considering taking enforcement action against Stephen Ehrlich, the former CEO of the bankrupt crypto lender Voyager, Bloomberg reported citing sources familiar to the matter. 

The U.S. Commodity Futures Trading Commission’s (CFTC) Enforcement Division has internally recommended charging Stephen Ehrlich following an investigation into Voyager’s actions. 

Voyager resumed withdrawals in June this year.  

CFTC Alleges Ehrlich Misled Cutomers

The regulatory agency alleges that Ehrlich violated CFTC rules by misleading customers regarding the security of their assets.

The CFTC is considering seeking fines and other non-criminal penalties in response to alleged misconduct. 

However, npt all CFTC investigations result in enforcement actions.

The matter is currently awaiting a decision from CFTC commissioners, who are said to be voting on whether to approve enforcement actions against Ehrlich in the coming days.

Voyager made headlines in August 2022 when it disclosed that the CFTC had requested information related to its business operations, customer interactions, and lending activities as part of its bankruptcy case. 

At the time of Voyager’s bankruptcy filing, Stephen Ehrlich, who was the CEO, had not been formally accused of any wrongdoing.

In response to the impending civil lawsuits, Ehrlich expressed his frustration, stating that he was “angry and confused” by the baseless accusations brought forward by the government. 

He also indicated his intention to vehemently contest the allegations.

Voyager Transferred Hundreds of Million to 3AC and Alameda 

However, reports suggest that during Ehrlich’s tenure, Voyager transferred substantial sums, totaling hundreds of millions of dollars, to high-risk entities, including cryptocurrency hedge funds Three Arrows Capital and Alameda Research.

The CFTC’s investigation revealed that Ehrlich had failed to conduct proper due diligence before lending over $650 million worth of Bitcoin and U.S. dollars to Three Arrows Capital. 

The loan was never paid back as 3AC collapsed and filed for bankruptcy in June last year.