Voyager Digital Agrees to $1.65 Billion Settlement with FTC in Landmark Case
Luisa Crawford Nov 29, 2023 09:16
The US FTC has awarded Voyager Digital a $1.65 billion settlement for misleading statements about customer fund safety, marking a significant regulatory action in the crypto market.
A decision that is of great significance has been handed down by the United States District Court for the Southern District of New York. A judge named Gregory Woods gave his approval to an order that required Voyager Digital and its affiliates to make a payment of $1.65 billion to the Federal Trade Commission (FTC) of the United States of America. This ruling, which was submitted on November 28, 2023, comes after a settlement was negotiated between Voyager and the Federal Trade Commission in October. This settlement marks a significant turning point in the regulatory control of bitcoin lending companies.
Legal action was taken by the Federal Trade Commission against Voyager Digital and its former CEO, Stephen Ehrlich, for making false statements about the security of consumer cash. In particular, they made a misleading assertion that client accounts were protected by the Federal Deposit Insurance Corporation (FDIC), which was a deception that took place at a time when Voyager was flirting with the possibility of filing for bankruptcy. Due to the false ads, consumers were given the impression that their deposits in United States dollars would be safe. This resulted in large losses for Voyager when the company filed for bankruptcy in July of 2022."
Voyager will be liable to a punishment of $1.65 billion and will be prohibited from promoting or delivering goods or services linked to digital assets as a result of the conditions of the settlement. In order to provide Voyager with the opportunity to compensate its clients, this punishment will be deferred. The Federal Trade Commission (FTC) is conducting ongoing investigations, and Voyager and connected parties are obligated to assist with the FTC in these investigations. This includes submitting testimony and responding with discovery requests. The sum of the settlement is going to be paid when the creditors have been compensated in the bankruptcy processes that Voyager is going through.
In the middle of a turbulent era in the cryptocurrency market, Voyager disclosed liabilities ranging from one billion to ten billion dollars when it filed for protection under Chapter 11 of the United States Bankruptcy Code in July of 2022. With the Commodity Futures Trading Commission (CFTC) seeking charges against former CEO Stephen Ehrlich, the case also encompasses claims of fraud and registration issues. The CFTC is pursuing charges against Ehrlich. This FTC settlement is not related to the bankruptcy procedures that are now taking place in court. These proceedings entail a scheme in which Voyager users are scheduled to get 35.72 percent of their claims at beginning.
This case highlights the rising attention and regulatory measures that are being taken inside the cryptocurrency sector, particularly with relation to the protection and representation of consumer assets. The participation of the Federal Trade Commission (FTC) in this case, as well as the high settlement amount, are examples of a rising trend of regulatory agencies aggressively participating in the operations of cryptocurrency firms in order to safeguard the interests of consumers.
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