1. Home
  2. Customers

Customers

Voyager Digital was ‘no better than a house of cards’ — CFTC commissioner

CFTC Commissioner Kristin Johnson’s comments came after separate lawsuits from the CFTC and FTC were filed against Voyager and its former CEO Stephen Ehrlich.

A commissioner for the United States Commodity Futures Trading Commission (CFTC) has slammed Voyager Digital for its mistakes that eventually led to the loss of billions of dollars of customer funds.

In an Oct. 12 statement, Commissioner Kristin Johnson took aim at Voyager for misleading practices, ignoring warning signs, and “bare-bones due diligence,” which failed to protect customers.

“Because of Voyager’s failures, the company became no better than a house of cards.”

The commodities said Voyager turned a blind eye to what its subsidiary investment firms were doing with its own customer funds:

“It is astounding that Voyager failed to exert pressure on the firms where it invested its customers' assets."

“Instead of demanding that investment firms that received customer assets offer greater levels of transparency, Voyager shirked the long-established expectations for custodians and simply dispatched customer funds with little effort to preserve the same," she added.

Johnson’s comments came after the regulator, along with the Federal Trade Commission, filed parallel lawsuits against Voyager’s former CEO Stephen Ehrlich on Oct. 12.

The CFTC lawsuit alleges Ehrlich and Voyager conducted fraud and “registration failures” over its platform and its “unregistered commodity pool”.

The FTC, on the other hand, reached a proposed settlement with Voyager, banning the firm from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets, according to an Oct. 12 statement.

Voyager and its affiliates agreed to a judgment of $1.65 billion, which will go toward repaying customers in the bankruptcy proceedings.

Meanwhile, a separate Oct. 12 statement from CFTC Commissioner Caroline Pham said the regulator will continue to pursue action against cryptocurrency firms that misuse customer funds:

“There is a significant difference between managing investor money for the purpose of trading derivatives, and taking deposits and providing loans to others. Without financing and consumer credit, our economy would grind to a halt.”

Related: CFTC issues $54M default judgment against trader in crypto fraud scheme

However, Pham thinks the CFTC may have stepped outside the bounds of its authority in interpreting what constitutes a commodity pool operator:

“Such an interpretation is an overreach beyond our statutory authority and would disrupt well-established legal and regulatory frameworks for lending to institutions and consumer finance.”

On Sept. 7, Pham called for the CFTC to establish a cryptocurrency regulatory pilot program which would address the risks retail investors face.

Voyager filed for Chapter 11 bankruptcy in July 2022 where it indicated that it may owe anywhere between $1 billion to $10 billion in assets to more than 100,000 creditors.

The cryptocurrency brokerage firm opened withdrawals for customers in June.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Crypto lender BlockFi gets court nod to repay customers

The approval is seen as a milestone moment for BlockFi's over 100,000 creditors, who have been long awaiting repayment.

The customers of bankrupt cryptocurrency lending platform BlockFi are one step closer to being paid out after a United States Bankruptcy Court in New Jersey approved its liquidation plan.

Bankruptcy Judge Michael A. Kaplan approved BlockFi's third amended Chapter 11 plan in a Sept. 26 court hearing, a filing on the same day shows.

Sept. 26 court filing in the bankruptcy case of BlockFi. Source: Kroll

The amount of repayment received by BlockFi's unsecured creditors will largely depend on whether BlockFi succeeds in its legal battle against FTX and other bankrupt cryptocurrency firms.

BlockFi's liquidation plan was approved after the firm settled a long-fought dispute with the creditors committee over the company’s senior management.

The now bankrupt lending platform blamed FTX's collapse for its own failure despite the creditor's committee citing concerns with BlockFi's relationship with FTX and its former CEO Sam Bankman-Fried.

Related: BlockFi asks court for permission to convert trade-only assets into stablecoins

Estimates show BlockFi owes up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to bankrupt crypto hedge fund Three Arrows Capital.

This is a developing story, and further information will be added as it becomes available.

Magazine: What do crypto exchanges really do with your money?

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Pacwest Stock Plummets Over 35% Following Release of Q1 Earnings Report Amidst Turmoil in Banking Industry

Pacwest Stock Plummets Over 35% Following Release of Q1 Earnings Report Amidst Turmoil in Banking IndustryFollowing the acquisition of First Republic Bank by JPMorgan Chase, several regional banks such as Pacwest and Western Alliance experienced a significant drop in their stock prices. On Tuesday afternoon, all four major U.S. benchmark stock indexes are in decline as regional bank stocks hit new lows. Banking Industry on Edge as Pacwest Shares Sink […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Former US President Donald Trump Launches Second NFT Card Collection

Former US President Donald Trump Launches Second NFT Card CollectionOn April 18, former U.S. president Donald Trump announced a second series of his digital Trump card collection, following the “great success” of his initial non-fungible token (NFT) trading cards. Despite selling out rapidly, Trump stated on Truth Social that he maintained the initial card prices for the new collection. Trump Unveils Series 2 NFT […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

The Fall of Medici Bank: Lessons on Fractional Reserve Banking From 15th Century Italy

The Fall of Medici Bank: Lessons on Fractional Reserve Banking From 15th Century ItalyAmid the banking chaos of the 21st century, some are looking back more than 600 years ago, to the Medici Bank — one of the most powerful banks of its time. It established its business and became one of the most respected banks in Europe during its prime, and the prominent Italian family of bankers […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Law Firm’s White Paper Claims US Bank Regulators Are Waging a ‘Clandestine Financial War’ Against Crypto Businesses

Law Firm’s White Paper Claims US Bank Regulators Are Waging a ‘Clandestine Financial War’ Against Crypto BusinessesAccording to a recent white paper published by four members of the law firm Cooper & Kirk, PLLC, U.S. bank regulators are attempting to “drive crypto businesses out of the financial system.” The paper, titled “Operation Chokepoint 2.0,” claims that after laying the groundwork by labeling lawful businesses as “reputationally risky,” federal bank regulators, with […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Flagstar Bank Acquires Signature Bank’s Assets and Branches, Excluding Cryptocurrency Operations

Flagstar Bank Acquires Signature Bank’s Assets and Branches, Excluding Cryptocurrency OperationsOn Monday, about a week after the collapse of Signature Bank, the Federal Deposit Insurance Corporation (FDIC) announced that Flagstar Bank, a wholly owned subsidiary of New York Community Bancorp, acquired 40 former branches of Signature and its assets. Flagstar assumed nearly all of Signature’s deposits, except for $4 billion of deposits related to the […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

British Bank Natwest Implements New Limits on Cryptocurrency Payments to Combat UK Crypto Scams

British Bank Natwest Implements New Limits on Cryptocurrency Payments to Combat UK Crypto ScamsOn March 14, 2023, the U.K.-based bank Natwest Group announced new limits on cryptocurrency payments, citing crypto scams that cost U.K. consumers £329 million annually. The limit imposed on crypto exchanges is £1,000 daily ($1,215), with a 30-day limit of £5,000 ($6,077). Natwest’s Cautious Approach Towards Crypto Assets Prompts Another Transfer Limit Amid the banking […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

US Regulators Close Silicon Valley Bank in One of the Largest Bank Failures Since Washington Mutual

US Regulators Close Silicon Valley Bank in One of the Largest Bank Failures Since Washington MutualAfter Silicon Valley Bank (SVB) experienced financial turmoil, the U.S. Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection and Innovation closed the financial institution. Insured depositors can withdraw their funds on Monday after the FDIC took over the failed bank. Federally Insured Depositors to Withdraw Funds on Monday, Uncertainty Looms for […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Pakistan Banks to Use Blockchain Technology for KYC

Pakistan Banks to Use Blockchain Technology for KYCBanks in Pakistan plan to launch an electronic platform for know-your-customer procedures that will be operating on a national level. The blockchain-based system will allow them to exchange the personal information of customers through what they describe as a decentralized and self-regulated network. Banks of Pakistan Looking to Employ Blockchain for KYC Checks Pakistan Banks’ […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week