Regulatory eyes are on Stephen Ehrlich, the ex-CEO of the insolvent crypto lender, Voyager, as U.S. overseers consider enforcement measures in his direction, as per sources reported by Bloomberg. The Enforcement Division of the U.S. Commodity Futures Trading Commission (CFTC) has voiced out the possible charging of Stephen Ehrlich as they dig deeper into the actions of Voyager.
The regulatory body posits that Ehrlich violated CFTC rules, having failed customers on the assurance of their assets’ security provisions. The route ahead, as being deliberated within the CFTC, is the imposition of fines and other non-criminal penalties reposed for the alleged misconduct. Yet, there remains the stance not all investigations by the CFTC result in enforcement actions, reliance is on the coming days’ decisions when CFTC commissioners are expected to vote on approving enforcement against Ehrlich.
Voyager came into prominent headlines back in August 2022 when it revealed a request by the CFTC for information concerning its business operations, customer dealings, and lending activities in light of its bankruptcy case. Worth noting is that Stephen Ehrlich, then the CEO at the time of Voyager’s bankruptcy filing, had no formal accusations levelled against him.
Challenged by the looming civil lawsuit, Ehrlich expressed his dismay and disorientation caused by the ‘unfounded’ accusations made by the government. He declared determination in contesting the allegations wholeheartedly.
Interestingly, under Ehrlich’s leadership, reports indicate that Voyager dispersed considerable amounts, up to hundreds of millions, to high-risk entities. These including cryptocurrency hedge funds like Three Arrows Capital (3AC) and Alameda Research. As unveiled by the CFTC’s investigation, Ehrlich had not performed adequate checks before the lending of over $650 million in Bitcoin and USD to Three Arrows Capital. A loan that went into the deep pockets of oblivion as 3AC went bankrupt and filed for bankruptcy last June.
In the grand arena of changing regulations and trust issues concerning crypto marketplaces, the strongest negotiator for keeping customer trust is transparency. Questions arise on the efficacy of regulatory structures currently in place. Are they too lenacious or deficiently veracious, or perhaps, we are in a learning curve towards solidifying the market’s foundation? It is clear that matters of trust are in the heart of it all and the crypto industry needs to address them before moving forward.
Source: Cryptonews
