CFTC Commissioner Kristin Johnson strongly criticized Voyager Digital, likening it to a precarious structure that eventually crumbled, causing the loss of billions of dollars in customer funds. Her comments followed legal actions taken by both the CFTC and the FTC against Voyager and its former CEO, Stephen Ehrlich.
In a statement made on October 12, Commissioner Kristin Johnson pointed out Voyager's deceptive practices, disregard for warning signals, and a lack of thorough due diligence, all of which failed to safeguard the interests of its customers. She highlighted how Voyager neglected to oversee the activities of its subsidiary investment firms involving customer funds:
"Rather than insisting that investment firms handling customer assets uphold high levels of transparency, Voyager neglected established custodial standards and transferred customer funds with minimal effort to ensure their protection," she added.
Commissioner Johnson's remarks came in the wake of parallel legal actions initiated by the CFTC and FTC against Voyager's former CEO, Stephen Ehrlich, on the same day. The CFTC lawsuit alleges fraudulent activities and "registration failures" by Ehrlich and Voyager in connection with their platform and an "unregistered commodity pool."
Conversely, the FTC reached a tentative settlement with Voyager, barring the company from promoting, marketing, or offering any products or services that involve the deposit, exchange, investment, or withdrawal of assets, as stated in an October 12 announcement. Voyager and its affiliates consented to a judgment of $1.65 billion, earmarked for reimbursing customers during bankruptcy proceedings.
In a separate statement on October 12, CFTC Commissioner Caroline Pham indicated the regulator's determination to pursue actions against cryptocurrency firms mismanaging customer funds. However, Pham expressed concerns that the CFTC may have exceeded its jurisdiction in defining what qualifies as a commodity pool operator.
On September 7, Pham had called for the establishment of a cryptocurrency regulatory pilot program by the CFTC to address the risks faced by retail investors.
Voyager filed for Chapter 11 bankruptcy in July 2022, disclosing potential liabilities ranging from $1 billion to $10 billion owed to over 100,000 creditors.
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