{"id":86289,"date":"2023-10-24T00:16:58","date_gmt":"2023-10-24T04:16:58","guid":{"rendered":"https:\/\/www.hedgeco.net\/news\/?p=86289"},"modified":"2023-10-23T23:55:00","modified_gmt":"2023-10-24T03:55:00","slug":"cftc-charges-former-chief-executive-officer-of-digital-asset-platform-with-fraud-in-massive-commodity-pool-scheme","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/10\/2023\/cftc-charges-former-chief-executive-officer-of-digital-asset-platform-with-fraud-in-massive-commodity-pool-scheme.html","title":{"rendered":"CFTC Charges Former Chief Executive Officer of Digital Asset Platform with Fraud in Massive Commodity Pool Scheme"},"content":{"rendered":"\n

(HedgeCo.Net) The Commodity Futures Trading Commission has filed a complaint in the U.S. District Court for the Southern District of New York against Tennessee resident Stephen Ehrlich, <\/strong>the former chief executive officer of now-bankrupt entities Voyager Digital Ltd.<\/strong>, Voyager Digital Holdings, Inc.<\/strong>, and Voyager Digital, LLC<\/strong> (collectively, Voyager). The complaint charges Ehrlich with fraud and registration failures in connection with the Voyager digital asset platform and Voyager\u2019s operation of an unregistered commodity pool. Ehrlich and Voyager falsely touted the Voyager platform as a \u201csafe haven\u201d to earn high-yield returns to induce customers to purchase and store digital asset commodities.<\/p>\n\n\n\n

In its continuing litigation against Ehrlich, the CFTC seeks 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, as charged.<\/p>\n\n\n\n

\u201cThis is yet another CFTC action seeking to hold accountable a chief executive officer for his role in the fraudulent operation of a digital asset platform,\u201d said Director of Enforcement Ian McGinley. \u201cEhrlich and Voyager lied to Voyager customers. While representing they would treat customers\u2019 digital asset commodities safely and responsibly, behind the scenes, they took shockingly reckless risks with their customers\u2019 assets, leading to Voyager\u2019s bankruptcy and huge customer losses. When their business began to collapse, they continued lying to their customers, concealing Voyager\u2019s 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.\u201d<\/strong><\/em><\/p>\n\n\n\n

Case Background<\/strong><\/p>\n\n\n\n

The complaint alleges, from at least February 2022 through July 2022, Ehrlich and Voyager engaged in a scheme to defraud customers by misrepresenting the safety and financial health of the Voyager digital asset platform. Ehrlich and Voyager, via publicly available postings on social media and their website, touted Voyager as a \u201csafe haven\u201d for customers\u2019 digital assets in an otherwise volatile market environment and that Voyager would operate with the \u201csame level of rigor and trust\u201d as a traditional financial institution. Ehrlich and Voyager also promised customers high-yield returns\u2014as much as 12%\u2014on certain digital asset commodities stored on the Voyager platform.<\/p>\n\n\n\n

To generate income to pay its customers the promised returns, Ehrlich and Voyager pooled customer assets stored on the Voyager platform and transferred billions of dollars\u2019 worth of customers\u2019 digital asset commodities as \u201cloans\u201d to high-risk third parties. In early 2022, following grossly inadequate due diligence, Ehrlich and Voyager transferred over $650 million<\/strong> in customer digital asset commodities to Firm A (a digital assets hedge fund) on an unsecured basis, with the understanding that Firm A would generate returns for Voyager by pooling Voyager\u2019s investment and trading commodity interests. In so doing, Voyager operated the Voyager Pool and acted as a commodity pool operator (CPO) without the required CFTC registration.<\/p>\n\n\n\n

Additionally, Ehrlich did not register as an associated person of a CPO, despite soliciting members of the public to contribute to the Voyager Pool. Based on the false promises related to the safety of Voyager\u2019s operations and receipt of high-yield returns, customers often collectively stored more than $2 billion worth of digital asset commodities on the Voyager platform. However, instead of providing a \u201csafe haven,\u201d Ehrlich and Voyager transferred customer digital assets to risky counterparties, such as Firm A, to fuel the high-yield returns used to attract and retain customers. In June 2022, Voyager recalled its customer digital assets commodities from Firm A. Firm A defaulted and, as a result, Voyager experienced dire operational liquidity issues. However, Ehrlich continued to falsely assert publicly that customer assets were safe with Voyager. On July 5, 2022, Voyager filed for bankruptcy, owing its customers in the United States more than $1.7 billion.<\/p>\n","protected":false},"excerpt":{"rendered":"

(HedgeCo.Net) The Commodity Futures Trading Commission has filed a complaint in the U.S. District Court for the Southern District of New York against Tennessee resident Stephen Ehrlich, the former chief executive officer of now-bankrupt entities Voyager Digital Ltd., Voyager Digital […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048,16047],"tags":[],"class_list":["post-86289","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news","category-insider-trading-2"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/86289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=86289"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/86289\/revisions"}],"predecessor-version":[{"id":86290,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/86289\/revisions\/86290"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=86289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=86289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=86289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}