The Commodity Futures Trading Commission (CFTC) has filed a complaint against Stephen Ehrlich, former CEO of Voyager Digital Ltd., Voyager Digital Holdings, Inc., and Voyager Digital, LLC (collectively, Voyager), in the U.S. District Court for the Southern District of New York. The charges stem from alleged fraud and registration failures connected to the Voyager digital asset platform and its operation as an unregistered commodity pool.
According to the CFTC, Ehrlich and Voyager falsely advertised the platform as a “safe haven” offering high-yield returns to attract customers to store their digital assets. The complaint alleges that from February 2022 through July 2022, Ehrlich and Voyager engaged in a scheme to mislead customers about the safety and financial stability of the platform.
The CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations. Director of Enforcement Ian McGinley stated that Ehrlich and Voyager lied to customers, taking “shockingly reckless risks” with their assets, ultimately leading to Voyager’s bankruptcy and significant customer losses.
The complaint details how Ehrlich and Voyager pooled customer assets and transferred billions of dollars’ worth of digital commodities as unsecured “loans” to high-risk third parties. In early 2022, over $650 million in customer assets was transferred to a digital asset hedge fund, referred to as Firm A, with the expectation of generating returns. This activity, the CFTC alleges, constituted operating a commodity pool without the required CFTC registration, and Ehrlich failed to register as an associated person.
Voyager’s marketing materials promised customers returns as high as 12% on certain digital assets. However, the CFTC contends that these promises were based on a fundamentally unsound and risky lending practice, masked by false claims of safety and rigorous financial oversight. The agency alleges that even as Voyager’s financial situation deteriorated, Ehrlich continued to mislead customers about the company’s true health.
Source: CFTC.gov
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