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CFTC Files Lawsuit Against Voyager Digital And Former CEO For Fraud

The US Commodity Futures Trading Commission (CFTC) has taken legal action against Voyager Digital and its former CEO, Stephen Ehrlich. 

The CFTC filed a complaint in the US District Court for the Southern District of New York, alleging fraud and registration failures related to the operation of the Voyager digital asset platform and an unregistered commodity pool.

Voyager Faces Legal Action For ‘Misleading Customers’

According to the CFTC, Ehrlich falsely marketed the Voyager platform as a safe haven for high-yield returns, deceiving customers to purchase and store digital assets. 

Per the filing, Voyager allegedly took “reckless risks” with customers’ assets, leading to Voyager’s bankruptcy and significant customer losses. The lawsuit seeks various penalties, including restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act.

In a separate but related action, the Federal Trade Commission (FTC) has charged Voyager and Stephen Ehrlich with violating the FTC Act and the Gramm-Leach-Bliley Act. 

The FTC alleges that the company falsely claimed customers’ accounts were insured by the Federal Deposit Insurance Corporation (FDIC) and misled consumers about the safety of their deposits.

The FTC’s complaint states that Voyager enticed customers to deposit funds by assuring them of the safety of their assets on the platform. However, Voyager was neither a bank nor a financial institution, and the deposits were not eligible for FDIC insurance. 

The FTC alleges that consumers suffered significant losses when Voyager experienced financial difficulties, including being locked out of their accounts and losing over $1 billion in cryptocurrency assets.

Stephen Ehrlich Rejects Settlement 

Voyager and its affiliates will be permanently banned from handling consumers’ assets and offering related services as part of a proposed settlement. 

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

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

The FTC’s complaint further alleges that Ehrlich transferred millions of dollars to his wife, Francine Ehrlich, including funds linked to the alleged unlawful conduct. 

The proposed settlement also prohibits Voyager and its affiliates from misrepresenting product benefits, making false representations to obtain financial information, and disclosing consumer information without consent.

Both regulatory bodies are seeking to hold Voyager, Stephen Ehrlich, and other involved parties accountable for their alleged deceptive practices and violations of financial regulations. 

Voyager

Featured image from Shutterstock, chart from TradingView.com 

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Voyager Sells 1.4 Trillion Shiba Inu, But There’s Good News For SHIB

In a recent revelation, Lookonchain, the on-chain analysis service, reported that Voyager Digital, the now-bankrupt crypto lending platform, has been offloading its crypto assets on Coinbase in recent days. Over the past four days, the defunct lender has sold 49 different crypto assets, netting approximately $63 million. For the SHIB army the most notable sale was the 1.4 trillion Shiba Inu tokens, which amounted to nearly $14.4 million.

Beyond SHIB, Voyager’s sales included significant amounts of Bitcoin (BTC), Ethereum (ETH), Chainlink (LINK), Polygon (MATIC), and Decentraland (MANA). “Voyager has been selling assets on #Coinbase for the past 4 days and has sold 49 tokens for ~$63M. Including: 781 BTC ($23M); 9,570 ETH ($17.6M); 1.4T SHIB ($14.4M); 234,660 LINK ($1.74M); 1.87M MATIC ($1.27M); 3M MANA ($1.1M);”, Lookonchain tweeted.

The sales have significantly reduced Voyager’s crypto holdings. However, they haven’t entirely emptied their coffers. The on-chain analysis service further detailed Voyager’s remaining assets: “Voyager currently holds $11.3M worth of assets, including: 52.4M VGX ($8.27M); 55 BTC ($1.62M); 537K KNC ($371K); 1.18 FTM ($286K); 20.7M STMX ($140K); 4.85M GALA ($111K).”

While the sales have drawn attention, there’s a silver lining for the SHIB community. According to Lookonchain’s data, Voyager’s SHIB holdings have been completely liquidated. Thus, Voyager’s SHIB holding have gone to zero, suggesting a potential reduction in sell pressure on the Shiba Inu token in the future.

Shiba Inu Price Shows Resilience

Despite the massive sell-off by Voyager, SHIB’s price remained resilient. The token has seen a surge of over 14.2% in the past week. This bullish momentum is largely attributed to the forthcoming Shibarium mainnet launch at the Blockchain Future Conference, starting today. Investors seem optimistic about SHIB’s potential, believing that if the layer-2 scaling solution delivers on its promises, the SHIB token could witness even more substantial gains.

At press time, the Shiba Inu price stood at $0.00001019 after finding support at the 38.2% Fibonacci retracement level ($0.00001007). The key resistance on a daily basis is currently the 50% Fibonacci level at $0.00001121. Should a breakout occur, SHIB could rise 21% from its current price to follow through to the 61.8% Fibonacci level. Major resistance is expected at this price level ($0.00001235).

The RSI on a daily basis has been in an ascending trend since the annual low on June 10 and was at 65 at press time. This leaves the SHIB bulls with further room to run. For an explosive double-digit move, the RSI should enter deep overbought territory.

For investors, today’s or tomorrow’s Shibarium launch should be taken with a grain of salt. As usual for the crypto market, it could be a “buy the rumor, sell the news” event, as the impact of the launch might only be seen in the long term over the coming months. In this case, the 200-day EMA at $0.00000938 will be a key support to defend for the bulls.

Shiba Inu price

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Voyager Digital Customers Left High And Dry With Only 35% Crypto Deposit Recovery

According to a Reuters report, Crypto lender Voyager Digital’s efforts to reorganize under Chapter 11 have ended, with a U.S. Bankruptcy Judge approving their proposed liquidation plan. 

The company filed for bankruptcy protection last July due to volatility in cryptocurrency markets and a default on a large loan made to crypto hedge fund Three Arrows Capital, which will return customers about $1.33 billion in crypto assets. However, customers will only recover about 35% of their cryptocurrency deposits as the company winds down its operations after a failed buyout attempt by crypto exchange Binance.US.

Voyager Leaves Customers With Only Fraction Of Deposits

Voyager’s bankruptcy case was complicated by two failed sale attempts during the bankruptcy process. The company initially sought to sell its assets for $1.42 billion to FTX, a deal that failed when FTX imploded in November. Binance.US signed a $1.3 billion offer but called off the deal on April 25, citing a “hostile and uncertain regulatory climate.”

Per the report, Voyager customers’ recovery hopes are now heavily dependent on the outcome of litigation with FTX, which is seeking to claw back $445 million in loan repayments made to Voyager before FTX collapsed into bankruptcy.

However, If Voyager fully prevails in the FTX litigation, customers’ expected recovery would be 63.74%, according to Voyager’s court filings.

Voyager intends to repay customers with the same type of cryptocurrency that they had in their accounts. However, for deposits held in unsupported cryptocurrencies that cannot be withdrawn from Voyager’s platform and for Voyager’s proprietary VGX token, Voyager will instead repay customers using the Circle’s stablecoin USDC.

Voyager was one of several crypto lenders to file for bankruptcy in 2022 after a boom in the COVID-19 pandemic. Other companies that filed for bankruptcy include Celsius Network, BlockFi, and Genesis Global Capital. 

Did the SEC Play A Role in Binance.US’s Failed Acquisition?

There are speculations that the Securities and Exchange Commission (SEC) may have had a hand in Binance.US’s failed $1.3 billion acquisition of crypto lender Voyager Digital. The buyout was called off in April, with Binance.US citing a “hostile and uncertain regulatory climate.” However, some industry experts believe the SEC’s increased scrutiny of the crypto industry may have played a role in the failed acquisition.

The Securities and Exchange Commission has been ramping its efforts to regulate the cryptocurrency industry. As a result, firms like Coinbase have been exploring ways to expand their operations to other jurisdictions. 

France, in particular, has been welcoming these firms due to the regulatory uncertainty in the United States. Market experts and even senators have criticized this approach by the regulatory agency, who argue that a clear rulebook is needed to promote innovation and diversify investment opportunities for American clients of crypto firms. A clear regulatory framework will benefit not only the industry but also the country as a whole.

Voyager

Featured image from iStock, chart from TradingView.com