Stephen Ehrlich, the erstwhile CEO of the now-defunct crypto lending platform Voyager, may soon face regulatory repercussions. As per a Bloomberg report citing individuals acquainted with the situation, U.S. regulators are mulling over potential enforcement actions against Ehrlich.
The Enforcement Division of the U.S. Commodity Futures Trading Commission (CFTC) has internally suggested levying charges against Stephen Ehrlich. This recommendation follows a comprehensive inquiry into the activities of Voyager.
Notably, after a period of cessation, Voyager reinitiated withdrawal services in June of the current year.
CFTC Alleges Ehrlich Misled Cutomers
The U.S. regulatory body, the CFTC, has put forth allegations claiming that Ehrlich contravened its regulations. Specifically, he is accused of deceiving customers about the safety and security of their assets.
In light of the purported infractions, the CFTC is contemplating the imposition of fines and other non-criminal punitive measures against Ehrlich.
It’s crucial to note that not every investigation by the CFTC culminates in enforcement actions.
The ball is now in the court of the CFTC commissioners. They are poised to cast their votes in the imminent future, determining whether to greenlight enforcement actions against Ehrlich or not.
In August 2022, Voyager drew significant attention after revealing that the CFTC had sought details pertaining to its business processes, customer engagements, and lending practices amid its bankruptcy proceedings.
At the juncture of Voyager’s bankruptcy declaration, Stephen Ehrlich, who held the position of CEO, had not been officially charged with any misdeeds.
Reacting to the looming civil litigations, Ehrlich voiced his dismay. He conveyed feelings of anger and bewilderment in the face of what he deemed as groundless claims advanced by the authorities.
Furthermore, he underscored his determination to rigorously challenge and refute the assertions made against him.
Voyager Transferred Hundreds of Million to 3AC and Alameda
Emerging reports indicate that during the period Ehrlich helmed Voyager, the platform funneled significant amounts, cumulatively reaching hundreds of millions of dollars, to high-risk parties. Notable among these were cryptocurrency hedge funds Three Arrows Capital and Alameda Research.
The CFTC’s probe unearthed that Ehrlich did not carry out sufficient due diligence before authorizing a loan amounting to over $650 million, comprising both Bitcoin and U.S. dollars, to Three Arrows Capital.
This financial oversight proved costly when Three Arrows Capital, often abbreviated as 3AC, went under and declared bankruptcy in June of the preceding year, leaving the substantial loan unpaid.