In an ongoing crackdown on fraudulent practices in the cryptocurrency industry, the Federal Trade Commission (FTC) has filed a lawsuit against the former CEO of Voyager, Stephen Ehrlich. The suit alleges that Ehrlich made false claims about the FDIC insurance coverage offered to customers’ accounts.
Key Takeaway
The FTC is suing the former CEO of bankrupt crypto company Voyager for falsely claiming that customers’ accounts were FDIC insured. This highlights the need for transparency and accurate information within the cryptocurrency industry to protect consumers from financial losses.
FTC Settlement and Investigation
After reaching a settlement with the FTC, Voyager, which recently filed for bankruptcy, has been permanently prohibited from handling consumer assets. As part of the settlement, Voyager will face a fine of $1.65 billion, although the payment of this fine has been suspended to prioritize compensating affected customers.
The investigation revealed that Voyager had falsely claimed that customers’ accounts were insured by the Federal Deposit Insurance Corporation (FDIC). However, it is important to note that the FDIC does not provide insurance coverage for cryptocurrency assets.
Impact on Customers
The consequences of Voyager’s false insurance claims were severe for its customers. When the company collapsed, customers were unable to access their funds, resulting in significant financial losses. Many individuals lost access to crucial assets, including salary deposits, college tuition funds, and down payments for homes, amounting to a collective loss of over $1 billion in cryptocurrency assets.
The Legal Proceedings
Parallel to the FTC lawsuit, the Commodities Futures Trading Commission (CFTC) has also filed charges against Stephen Ehrlich. The charges include allegations of fraud and registration failures.
In recent years, government agencies have become increasingly vigilant in taking legal action against fraudulent practices within the crypto industry. This crackdown is partly driven by high-profile failures, such as the collapse of FTX, which has resulted in the former CEO, Sam Bankman-Fried, facing trial for fraud. Additionally, there has been increased scrutiny on the promotion of unregistered securities, as seen in the recent charges brought against Mila Kunis and Ashton Kutcher’s “Stoner Cats” NFT series by the Securities and Exchange Commission (SEC).
