The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Stephen Ehrlich, the co-founder and former CEO of crypto lender Voyager Digital Ltd., alleging violations of derivatives rules during his tenure at the now-bankrupt cryptocurrency lending platform.
The federal lawsuit, lodged in New York, accuses Ehrlich and Voyager of misguiding customers by portraying the platform as a “safe haven” for their digital assets.
CFTC Sues Crypto Lender Voyager Ex-CEO Stephen Ehrlich
The CFTC’s legal move comes after an investigation concluded that Stephen Ehrlich, the co-founder and former CEO of Voyager Digital Ltd., had breached agency rules. The watchdog’s commissioners were deliberating on greenlighting an enforcement action against Ehrlich, spotlighting regulatory scrutiny in the crypto lending domain.
“Ehrlich and Voyager lied to Voyager customers. While representing they would treat customers’ digital asset commodities safely and responsibly, behind the scenes, they took shockingly reckless risks with their customers’ assets, leading to Voyager’s bankruptcy and huge customer losses. When their business began to collapse, they continued lying to their customers, concealing Voyager’s true financial health. Amplifying their fraud, Ehrlich and Voyager broke their trust with customers while acting in capacities that required CFTC registration, which they failed to obtain,” CFTC Director of Enforcement Ian McGinley said.
This lawsuit underscores the increasing regulatory vigilance within the crypto industry, particularly targeting misleading practices that could potentially harm investors. The case against Ehrlich exemplifies the hurdles crypto lending platforms might face amidst the evolving regulatory framework.
Ehrlich’s case with the CFTC is emblematic of the broader challenges the crypto industry confronts. Regulators seek to ensure adherence to established financial norms and protect investor interests.
“Day in and day out, Voyager worked closely with the relevant regulators. These allegations appear to be one of those times where the referees are making new rules and calling foul after the game has ended. I look forward to being vindicated in court,” Ehrlich said in an emailed statement.
Read more: Voyager Creditors Withdraw Over $250M from Platform in Past 3 Weeks
“Having spent nearly my entire career working in regulated markets, including more than 10 years at public companies, I have never had a single blemish on my record,” Ehrlich added.
Through this lawsuit, the CFTC aims to uphold the integrity of the growing crypto market. It signals a cautionary note to other crypto enterprises about adherence to regulatory guidelines.
This is a developing story…
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