FTC Takes Aim: Voyager Digital Faces Judgment
The Federal Trade Commission (FTC) has recently reached a significant settlement with Voyager Digital, a crypto company that has filed for bankruptcy. The settlement permanently bans Voyager from managing consumer assets and also includes a lawsuit against its former CEO, Stephen Ehrlich. Ehrlich is being charged with falsely claiming that customers’ accounts were insured by the Federal Deposit Insurance Corporation (FDIC) and were “safe,” despite the company’s impending financial collapse. In addition to Stephen Ehrlich, the complaint names his wife, Francine Ehrlich, as a relief defendant.
Voyager’s Web of False Promises Unraveled
From at least 2018 until its declaration of bankruptcy in July 2022, Voyager lured consumers by assuring them that their deposits would be secure. These promises convinced individuals to entrust their funds to the company, leading to severe consequences when Voyager ultimately failed. Consumers lost access to substantial assets, including ongoing salary deposits, college tuition funds, and down payments for homes. During this period, consumers were unable to access their cash accounts for over a month. Consequently also lost more than $1 billion in cryptocurrency assets.
FTC: Strong Stand Against Crypto Scams
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, emphasized the agency’s commitment to protecting consumers from cryptocurrency scams. He noted that consumers reported losses of over $1.4 billion due to such scams in the last year. Levine added, “This action reminds companies and individuals: don’t play fast and loose with claims about FDIC insurance.”
Ehrlich’s Deceptive Reassurance and the Grim Outcome
The proposed settlement with Voyager and its affiliates is extensive. It permanently prohibits these entities from offering, marketing, or promoting any product or service related to depositing, exchanging, investing, or withdrawing assets. Moreover, a judgment of $1.65 billion has been agreed upon, which will be suspended temporarily to facilitate the return of remaining assets to consumers during the bankruptcy proceedings. However, Ex-CEO Stephen Ehrlich declined a settlement, so the FTC will pursue legal action in federal court.
Legal Ramifications: FTC’s Unyielding Pursuit of Justice
Voyager attracted consumers by encouraging them to deposit cash and cryptocurrency, asserting that their assets were exceptionally secure on the platform. To incentivize deposits, the company offered consumers the opportunity to convert their cash into a cryptocurrency known as USD Coin. A stablecoin that tracks the value of the U.S. dollar.
Parallel Charges: Ehrlich Faces the Consequences
The Commission voted unanimously to file a complaint against Voyager and its affiliated companies, Stephen Ehrlich, and relief defendant Francine Ehrlich. The complaint has been filed in the U.S. District Court for the Southern District of New York.
In a parallel action, on October 12, the Commodity Futures Trading Commission separately charged Ehrlich with fraud and registration failures.
Featured Image By: The Crypto Times
