A complaint was filed against Ehrlich in the U.S. District Court for the Southern District of New York. The Tennessee resident stands accused of fraud and failing to register the operations of Voyager's crypto brokerage and lending business. Furthermore, he and <a href="https://financefeeds.com/voyager-creditors-pay-16-4-million-in-legal-fees/">Voyager</a> are alleged to have misrepresented the platform as a "safe haven" offering high-yield returns, enticing customers to buy and store digital assets. 
The CFTC's enforcement division has recommended taking enforcement action against Ehrlich, pursuing various penalties. The regulator is seeking restitution, disgorgement of ill-gotten gains, civil monetary penalties, permanent bans on trading and registration, and a lasting injunction to prevent any further breaches of the Commodity Exchange Act (CEA) and CFTC regulations. 
Director of Enforcement Ian McGinley said: “Ehrlich and Voyager lied to Voyager customers. While representing they would treat customers’ digital asset commodities safely and responsibly, behind the scenes, they took shockingly reckless risks with their customers’ assets, leading to Voyager’s bankruptcy and huge customer losses.&nbsp;When their business began to collapse, they continued lying to their customers, concealing Voyager’s true financial health.” 
The complaint further alleges that Ehrlich and Voyager systematically misled their customers by misrepresenting the safety and financial health of the digital asset platform. They further bolstered their claims by ensuring customers that their platform would maintain standards comparable to traditional banking institutions. The lofty promise of high-yield returns, sometimes going up to 12%, made on specific digital assets only added to their allure. 
Ehrlich and Voyager touted Voyager as a "safe haven" for <a href="https://financefeeds.com/binance-us-wont-bail-out-ftx-cites-hostile-us-regulations/">customers' digital assets</a> in a volatile market environment, promising high-yield returns. However, to generate income for these returns, Voyager loaned billions of dollars' worth of customers' assets to high-risk third parties with minimal due diligence. Customers often stored over $2 billion worth of digital asset commodities on the <a href="https://financefeeds.com/voyager-customers-get-access-to-withdraw-funds/">Voyager platform</a>, but it filed for bankruptcy in July 2022, owing customers in the U.S. over $1.7 billion. 
One such concerning transaction was when over $650 million of customer assets were transferred to Sam Bankman-Fried’s <a href="https://financefeeds.com/sam-bankman-frieds-alameda-research-to-repay-200m-to-voyager/">Alameda Research</a>. Voyager's association with the failed hedge fund was made on the promise that the latter would generate returns by pooling Voyager's investments. Such actions led to Voyager effectively acting as a commodity pool operator (CPO) without the requisite CFTC registration, while Ehrlich himself evaded registration as an associated person of a CPO. 
Earlier this year, FTX’s failed trading arm asked a court to claw back $445 million from Voyager Digital, which it said SBF’s empire paid to the crypto lender before collapsing into bankruptcy. Alameda Research seeks to recover those loan payments from the troubled digital asset manager since they were made close to FTX’s bankruptcy filing. Under certain circumstances, federal laws consider such payments eligible to be ‘recoverable’ and thus could be used to repay FTX’s own creditors. 
Adding to their woes, the Federal Trade Commission (FTC) also initiated charges against Ehrlich and Voyager on October 12. They face allegations of violating the FTC Act and the Gramm-Leach-Bliley Act, marking a dual legal challenge for the beleaguered digital platform.

CFTC sues Voyager and its CEO over Alameda Research loans

FinanceFeeds

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