FTC sues bankrupt crypto company Voyager’s CEO over false FDIC insurance claims
After settling on Thursday with the Federal Trade Commission (FTC), bankrupt crypto company Voyager is permanently banned from handling consumers’ assets. But the government agency also announced on Thursday that it’s suing Voyager’s former CEO, Stephen Ehrlich, for falsely claiming that users’ accounts were FDIC insured.
When a bank or financial service is FDIC insured, that means that a customers’ funds will be protected even if the bank fails. While Voyager promised customers this vital protection, these claims weren’t true, as the FDIC doesn’t insure crypto assets at all.
“When the company failed, consumers lost access to significant assets they had saved, including ongoing salary deposits, college tuition funds, and down payments for homes,” the FTC explained in a statement. Voyager’s customers were unable to access their cash accounts for over a month, and more than $1 billion was lost in crypto assets.
Voyager filed for bankruptcy in July 2022, citing volatile crypto prices and the bankruptcy of Three Arrows Capital (3AC), a crypto hedge fund that owed Voyager $650 million.
As part of the settlement, the FTC is fining Voyager $1.65 billion, but the fine is suspended so that the defunct company can use that money to pay back customers instead. In a parallel filing, the CFTC is also charging Ehrlich with fraud and registration failures.
Government agencies have been increasingly litigious when it comes to crypto companies, especially in light of high-profile failures like the FTX collapse — currently, former FTX CEO Sam Bankman-Fried is on trial for fraud. Just last month, the SEC charged Mila Kunis and Ashton Kutcher’s “Stoner Cats” NFT series for promoting unregistered securities.
