Former Voyager Digital CEO Stephen Ehrlich must pay $750,000 in disgorgement to customers of his long-bankrupt cryptocurrency platform, court documents show.
The U.S. District Court for the Southern District of New York entered a consent order imposing permanent injunctive relief, disgorgement and equitable relief against Ehrlich in a lawsuit filed in 2023 by the Commodity Futures Trading Commission.
The order also imposes a three-year registration ban against Ehrlich and prohibits him from managing and advising the trading for third parties.
“This resolution once again highlights the CFTC’s important role in the digital asset space,” Charles Marvine, acting chief of the division of enforcement’s retail fraud and general enforcement task force, said in a prepared statement. “Compensating victims and limiting a defendant’s ability to cause future harm are squarely within the CFTC’s core mission.”
Voyager was one of the first major crypto firms to go bankrupt in 2022. It was precipitated by the Terra/Luna collapse, which led to the collapse of crypto hedge fund Three Arrows Capital. 3AC, in turn, could not repay a $650 million loan it had previously taken from Voyager.
Following Voyager’s bankruptcy, competitor FTX won the bid to buy its $1.4 billion in assets. But the bid failed when FTX itself went bankrupt in November 2022. Binance.US then made a play to purchase what was left of Voyager that December, but abandoned the deal in 2023 due to the “hostile and uncertain regulatory climate in the United States.”
The regulatory climate for crypto has shifted significantly since 2023, largely since President Donald Trump returned to the White House in January. Trump appointed multiple pro-crypto regulators; and the White House Working Group on Digital Assets called upon regulators and lawmakers in July to cement rules and regulations around registration, custody and trading of digital assets in pursuit of “the new American Golden Age.”
But according to the Southern District of New York, Ehrlich is on the hook – and must pay his $750,000 disgorgement by Sept. 25, or pay post-judgment interest.
This disgorgement is on top of a $2.8 million fine by the Federal Trade Commission in June, which settled allegations that Ehrlich and his company misled consumers. As part of that settlement, Ehrlich also agreed to a ban on marketing or selling crypto products.
Attorneys for Ehrlich could not be reached for immediate comment.
