The Federal Trade Commission in an announcement stated that they are going against Stephen Ehrlich, the former CEO of Voyager Digital, a crypto company that went bankrupt, and that they have also made a settlement with the company that it is getting a permanent ban from handling the assets of the consumers.
The ex-CEO will be facing a lawsuit for claiming that all the accounts of its customers have been secured with insurance from the Federal Deposit Insurance Corporation (FDIC) when in reality the accounts were not insured.
The ex-CEO of the company misled the customers with the false promise of the FDIC claim resulting in them losing above 1 billion US dollars when Voyager was declared to be bankrupt.
Mr Ehrlich claimed that all the customer accounts were secured by the company even when it was definite to him that the company was moving towards bankruptcy. His wife, Francine Ehrlich, is named as a relief defendant in the same complaint.
What Is The Settlement Proposed By The FTC?
In the stalemate that FTC proposed to Voyager, it says that the crypto company nor the affiliates of the company will not be able to offer, market, or promote any service or product that has the potential to be used to deposit, invest, exchange or withdraw any assets and that this restriction is a permanent ban for the company as well as all of the affiliates.
The companies reached an agreement with the judgment of a total of 1.65 billion US dollars that will permit Voyager to give back its remaining assets to the consumers in the awaiting bankruptcy proceedings. However, Ehrlich did not reach an agreement on this settlement making the FTC proceed against him with the lawsuit in the federal court.
What Does The FTC Have To Say?
Samuel Levine, the Director of the Bureau of Consumer Protection under the FTC said that the consumers had reported more than 1.4 billion US dollars in losses to the cryptocurrency scams in the previous year alone. He continued that the Federal Trade Commission would continue to crack down on the ones who make false promises and potential lies to the consumers about these risky assets.
He added that the now-made action of settlement and lawsuit against Voyager and its ex-CEO would serve as a reminder for all companies and individuals that they should not be playing fast and loose with claims in the name of FDIC insurance.
The False Claiming Of FDIC Insurance By Voyager To Its Customers
The marketing strategies of Voyager offered direct promises to its customers that reassured the safety of their deposits in the company.
The official platform of Voyager displayed a message that said “USD held with Voyager is now FDIC insured.”
Things took a toll as Voyager is only a crypto company and it does not have the position or recognition as a bank or even a financial institution that deposits made in it by any of the customers can not get insured by the FDIC.
The FDIC does not provide insurance to crypto assets and it makes Voyager ineligible to insure their customer assets with FDIC. All this time Voyager was holding the assets deposited by the customers in a bank and these cash will only be protected if the bank fails. And their cryptocurrency was not protected at all.