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- 1 Voyager Digital, a cryptocurrency brokerage company, is on the hit list of CFTC for errors that led to the loss of billions of dollars in customer funds.
- 2 Kristin Johnson, US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Voyager Digital.
Securing customers’ funds is one of the main accountability of firms, mainly working in the cryptocurrency brokerage industry. Voyager Digital, a crypto brokerage company, failed to secure the customer’s funds, resulting in a loss of billions of dollars. Voyager’s misleading practices not only put the customer’s funds in danger but also impacted the reputation of the crypto industry.
Keeping the whole scenario in mind, Kristin Johnson, CFTC commissioner, filed a lawsuit against the firm.
What’s Wrong with Voyager Digital?
The commissioner of CFTC, Kristin Johnson, on October 12th, commented on Voyager Digital, a cryptocurrency brokerage company.
The statement came after various separate lawsuits from the Federal Trade Commission (FTC) and CFTC were filed against Voyager Digital and its former CEO, Stephen Ehrlich. The commission slammed the brokerage company for its errors that resulted in the loss of billions of dollars in customer funds.
Voyager Digital, a cryptocurrency brokerage company established in 2018, filed for Chapter 11 bankruptcy in July 2022, owing around $1 Billion and $10 Billion in assets to approximately 100,000 creditors.
In addition, the firm opened withdrawals for consumers in June. Kristin Johnson uncovered the misleading practices of the firm, ignoring warning signs, and stating the company was a house of cards and nothing else.
“The company blindly misused its customers’ funds, putting the future of the company and customers in danger”, stated Kristin.
Despite demand, Voyager Digital shrunk the long-established expectations for custodians and dispatched users’ funds with little effort to safeguard the same, she added.
The case was highlighted to the CFTC commissioner after the FTC and CFTC filed parallel lawsuits against Voyager’s former CEO, Enrlich. The lawsuit was filed on October 12, 2023.
The former CEO of Voyager Digital is alleged to have attempted fraud and registration failure over the platform and unregistered commodity pool.
What’s Next?
Based on the statement of FTC, Voyager reached a settlement with FTC to repay customers’ funds. FTC announced the banning of the firm from all activities including offering, promoting, and marketing of crypto products and services along with repaying the customer’s funds which is around $1.65 Billion.
In addition to this, Caroline Pham, CFTC Commissioner, expressed concern and assured action against cryptocurrency firms that misused the consumer’s funds. Pham also called for the CFTC to come up with a cryptocurrency regulator pilot program to address such issues and handle the risks more appropriately.
CFTC is expected to not only punish the bad actors in the cryptocurrency world but also come up with strong regulations to identify and manage the risk efficiently.
Conclusion
Voyager Digital, a crypto brokerage company that filed for bankruptcy in July 2022, was again caught by CFTC on October 12. This time, Kristin Johnson, the commissioner of CFTC, pointed fingers at Voyager Digital and its former CEO, slamming the firm for its mistakes. As a result, the company is banned from performing any action related to crypto exchange or trading.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
