The Commodity Futures Trading Commission (CFTC) has initiated a complaint in the US District Court for the Southern District of New York against Stephen Ehrlich, the former CEO of the now-defunct Voyager Digital and its affiliated entities.
The complaint accuses Ehrlich of fraud and failing to register concerning the Voyager digital asset platform and its operation of an unregistered commodity pool. The CFTC alleges that Ehrlich and Voyager misrepresented the platform as a “safe haven” for customers seeking high-yield returns, which led them to invest in and store digital asset commodities.
Ian McGinley, the CFTC’s director of enforcement, remarked, “Ehrlich and Voyager misled their customers. They assured clients that their digital asset commodities would be managed safely, while in reality, they engaged in reckless practices with those assets, culminating in Voyager’s bankruptcy and significant losses for customers. Even as their business began to fail, they continued to deceive customers by hiding the true state of Voyager’s finances. Furthermore, while acting in roles requiring CFTC registration, they neglected to secure the necessary credentials.”
In response, Ehrlich stated, “The talented management team at Voyager created and maintained our platform in full compliance with the existing regulatory structure. Our team consistently communicated and worked closely with our regulators.”
The CFTC, in its ongoing legal action against Ehrlich, seeks restitution, disgorgement, civil monetary penalties, permanent bans on trading and registration, and a permanent injunction against future violations of the Commodity Exchange Act and the CFTC’s regulations.
According to the complaint, from at least February 2022 through July 2022, Ehrlich and Voyager engaged in deceptive practices by misrepresenting the platform’s safety and financial condition. They marketed Voyager as a “safe haven” during a turbulent market and promised high returns—up to 12%—on specific digital asset commodities stored on the platform.
To fulfill these promised returns, the CFTC alleges that Ehrlich and Voyager pooled customer assets and transferred billions of dollars’ worth of digital asset commodities as “loans” to high-risk third parties. They reportedly transferred over $650 million in customer assets to a hedge fund without proper due diligence, intending for the fund to generate returns for Voyager by managing its investment activities. This constituted operating an unregistered commodity pool and acting as a commodity pool operator without the necessary CFTC registration.
Moreover, the CFTC states that Ehrlich failed to register as an associated person of a commodity pool operator, despite actively soliciting public contributions to the Voyager Pool.
The CFTC claims that as a result of these false assurances regarding the safety of Voyager’s operations and promised high returns, customers collectively stored more than $2 billion in digital asset commodities on the platform.
Voyager was one of several cryptocurrency firms that failed in 2022, with its digital assets subsequently acquired by FTX for $1.4 billion.