Former Voyager CEO Slammed with Lawsuit from Each of CFTC and FTC Over Fraud

The FTC lawsuit accuses the former Voyager CEO of fraud and misleading users, while the CFTC said the firm and CEO took reckless risks.

The Federal Trade Commission (FTC) and the United States Commodity Futures Trading Commission (CFTC) have both filed lawsuits against the former CEO of lending platform Voyager. Each lawsuit claims that Steve Ehrlich conducted fraudulent activities and was insincere about government customer protection.

The FTC Lawsuit Against Voyager

In a Thursday press release, the FTC said it is suing Ehrlich for “falsely claiming that customers’ accounts were insured by the Federal Deposit Insurance Corporation (FDIC).” The FTC claims that Ehrlich continued to mislead customers about the safety of their funds even when it was clear that the company was approaching bankruptcy.

The accusation notes that from at least 2018 until Voyager declared bankruptcy in July 2022, the company enticed consumers by convincing them that their funds were safe. However, users lost more than $1 billion worth of crypto assets when the company went under, including college tuition funds, home down payments, and salary deposits. Users were locked out of their accounts for over a month.

According to the FTC, Voyager incentivized users to convert their funds to USD Coin, promising that “YOUR USD IS FDIC INSURED.” However, since Voyager is neither a bank nor a financial institution, customer deposits were not eligible for FDIC insurance. In addition, the FDIC does not insure crypto assets. All funds were in an account Voyager controlled at a traditional bank.

The FTC also announced a settlement that permanently bans Voyager from handling consumer assets. It said:

“The proposed settlement with Voyager and its affiliates will permanently ban the companies from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets.”

Voyager and its affiliates have also agreed to a $1.65 billion judgment. However, the FTC has suspended it to allow the company to return assets to consumers.

The CFTC Complaint

An announcement from the CFTC revealed a complaint filed in the US District Court for the Southern District of New York. The CFTC is accusing Ehrlich of fraud and registration failures. According to the release, Voyager failed to properly register the operation of an unregistered commodity pool. The publication also noted the falsehood of promoting Voyager as a “safe haven” where users can earn high returns.

According to the CFTC’s Director of Enforcement Ian McGinley, Ehrlich and Voyager lied to customers, assuring them of safe practices. However, the CFTC says the management took “shockingly reckless risks” with user funds, eventually leading to bankruptcy. The release continued:

“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 CFRT registration, which they failed to obtain.”

The CFTC said Ehrlich and Voyager pooled customer assets and transferred billions of dollars to “high-risk third parties.” After failing to do adequate due diligence, Ehrlich and Voyager transferred more than $650 million in customer funds to a firm that would generate returns. By June, Voyager tried to recall its funds from the firm, but failed. Although this led to liquidity issues, Ehrlich continued assuring customers that funds were safe.



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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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