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Former Voyager Digital CEO faces CFTC enforcement action: Bloomberg

2min Read

Former Voyager Digital CEO Stephen Ehrlich may face enforcement action by the CFTC for alleged derivatives violations.

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  • CFTC staff were evaluating the possibility of initiating action against Ehrlich.
  • Prior to this, the company faced scrutiny from the U.S. Federal Trade Commission.

The United States Commodity Futures Trading Commission (CFTC) officials are reportedly contemplating taking enforcement action against Stephen Ehrlich, the former CEO of cryptocurrency lending firm Voyager Digital.

This comes after an investigation concluded that Ehrlich violated U.S. derivatives regulations before Voyager filed for bankruptcy in July 2022 during a cryptocurrency market downturn.

According to a Bloomberg report from 6 October, CFTC staff are evaluating the possibility of initiating action against Ehrlich in response to the findings of the investigation. Ehrlich, however, expressed frustration with the allegations, stating:

“These allegations appear to be one of those times where the referees are making new rules and calling foul after the game has ended.”

Probable action to follow mounting Voyager Digital problems

The investigation into Ehrlich’s alleged violations of derivatives regulations adds to the woes of Voyager Digital, which is still in the midst of bankruptcy proceedings.

Prior to this, the company faced scrutiny from the U.S. Federal Trade Commission over its purportedly deceptive and unfair marketing practices. In May, a bankruptcy court approved Voyager’s plan to reimburse its customers, but the case is still ongoing.

The CFTC is currently handling multiple cases against cryptocurrency firms that have the potential to impact the U.S. regulatory landscape.

While the Securities and Exchange Commission (SEC) has been responsible for many enforcement actions in 2023, the CFTC’s involvement in the crypto space has not gone unnoticed.

For instance, Binance [BNB], a major cryptocurrency exchange, and its CEO, Changpeng Zhao, have sought to have a CFTC lawsuit filed in March dismissed. Additionally, several executives at Binance.US have departed from the exchange amid increasing regulatory scrutiny.

Conflicting views on regulation between CFTC and SEC

Meanwhile, the CFTC Chair, Rostin Behnam, has emphasized the urgent need for a comprehensive regulatory framework for crypto assets in the United States.

He called for updated policy frameworks to adequately regulate virtual assets, highlighting the lack of regulation in the crypto commodity market.

Behnam’s stance contrasts sharply with that of the SEC Chair, Gary Gensler, who believes existing securities laws are sufficient. The debate also extends to the classification of cryptocurrencies as securities or commodities, with both regulators holding differing views on crypto regulation

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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