US Regulator Reportedly Mulls Penalizing Former CEO Of Voyager Digital

The U.S. Commodity Futures Trading Commission (CTFC) is reportedly considering taking enforcement action against Stephen Ehrlich, the CEO and co-founder of a bankrupt crypto lender Voyager Digital, for misleading customers.

After conducting an investigation into the now-bankrupt crypto lenders, investigators at the CFTC concluded that Ehrlich broke derivatives regulations prior to the collapse of the business, leading to its bankruptcy filing, Bloomberg reported, citing people familiar with the matter.

Moreover, the report highlighted that staff at the enforcement division of the CFTC recommended suing Ehrlich for breaking the rules by misleading customers about the safety of the business' assets.

According to the report, CFTC commissioners are contemplating whether to approve the enforcement action against the CEO and co-founder of Voyager Digital.

The CFTC can impose fines and file criminal charges on individuals it accuses of wrongdoing, although it has not filed any charges against Ehrlich.

The report said that Ehrlich was "angered and perplexed" by the regulator's potential civil claims, labeling them unfounded.

The Voyager Digital co-founder also emphasized that the crypto business had worked closely with regulators while it was still operating and maintained a collaborative relationship with authorities., seemingly indicating that the allegations came as a surprise to him considering previous communications with the regulator.

"Day in and day out, Voyager worked closely with the relevant regulators," the Voyager Digital co-founder said in an emailed statement.

"These allegations appear to be one of those times where the referees are making new rules and calling foul after the game has ended. I look forward to being vindicated in court," Ehrlich added.

"Having spent nearly my entire career working in regulated markets, including more than 10 years at public companies, I have never had a single blemish on my record," Ehrlich was quoted as saying by Reuters, adding that he was being used as a "scapegoat for the bad actions of others at different companies."

If the CFTC pushes for the enforcement action, it could serve as a precedent in terms of accountability and highlight the need for robust oversight in the crypto lending industry.

The bankruptcy of Voyager Digital is considered one of the biggest events in 2022. It occurred when the crypto empire built by Sam Bankman-Fried unraveled and came crashing down.

Voyager Digital filed for bankruptcy in July 2022 and is currently in the middle of bankruptcy proceedings.