Thursday, July 25, 2024

US sues bankrupt crypto platform Voyager’s CEO, permanently bans company

The US Federal Trade Commission (FTC) has announced a settlement with bankrupt crypto company Voyager that will permanently ban it from handling consumers’ assets.

The Commission said late on Thursday it is also filing a lawsuit against its former CEO, Stephen Ehrlich, for falsely claiming that customers’ accounts were insured by the Federal Deposit Insurance Corporation (FDIC) and were “safe”, even as the company was approaching an eventual bankruptcy.

The complaint also named Stephen Ehrlich’s wife, Francine Ehrlich, as a relief defendant.

“Consumers reported over $1.4 billion in losses to cryptocurrency scams in the last year, and the FTC continues to crack down on those who lie to consumers about these risky assets,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.

“This action reminds companies and individuals: don’t play fast and loose with claims about FDIC insurance,” he added.

Voyager used promises that consumers’ deposits would be “safe” to entice them to hand over their funds.

When the company failed, consumers lost access to significant assets they had saved, including ongoing salary deposits, college tuition funds, and down payments for homes, according to the complaint.

The consumers were locked out of their cash accounts for more than a month and lost more than $1 billion in crypto assets.

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.

The companies also agreed to a judgment of $1.65 billion, which will be suspended to permit Voyager to return its remaining assets to consumers in the bankruptcy proceedings.

Stephen Ehrlich has not agreed to a settlement and the FTC’s case against him will proceed in federal court, said the Commission.

In a parallel action, the Commodity Futures Trading Commission separately charged Ehrlich with fraud and registration failures.

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