FTC sues bankrupt crypto company Voyager’s CEO over false FDIC insurance claims

After settling on Thursday with the Federal Commerce Fee (FTC), bankrupt crypto firm Voyager is completely banned from dealing with customers’ belongings. However the authorities company additionally introduced on Thursday that it’s suing Voyager’s former CEO, Stephen Ehrlich, for falsely claiming that customers’ accounts have been FDIC insured.

When a financial institution or monetary service is FDIC insured, that signifies that a clients’ funds can be protected even when the financial institution fails. Whereas Voyager promised clients this important safety, these claims weren’t true, because the FDIC doesn’t insure crypto belongings in any respect.

“When the corporate failed, customers misplaced entry to vital belongings they’d saved, together with ongoing wage deposits, school tuition funds, and down funds for properties,” the FTC defined in a press release. Voyager’s clients have been unable to entry their money accounts for over a month, and greater than $1 billion was misplaced in crypto belongings.

Voyager filed for chapter in July 2022, citing unstable crypto costs and the chapter of Three Arrows Capital (3AC), a crypto hedge fund that owed Voyager $650 million.

As a part of the settlement, the FTC is fining Voyager $1.65 billion, however the tremendous is suspended in order that the defunct firm can use that cash to pay again clients as an alternative. In a parallel submitting, the CFTC can also be charging Ehrlich with fraud and registration failures.

Authorities businesses have been more and more litigious in relation to crypto corporations, particularly in mild of high-profile failures just like the FTX collapse — at present, former FTX CEO Sam Bankman-Fried is on trial for fraud. Simply final month, the SEC charged Mila Kunis and Ashton Kutcher’s “Stoner Cats” NFT series for selling unregistered securities.