Former Voyager Digital CEO Stephen Ehrlich will pay $2.8 million and face a lifetime ban from crypto services after deceiving customers about FDIC insurance coverage, leading to over $1 billion in consumer losses when the company collapsed.
Key Takeaways
- Stephen Ehrlich, Voyager Digital’s former CEO, must pay $2.8 million to settle FTC charges for falsely claiming customer accounts were FDIC-insured
- The settlement permanently bans Ehrlich from marketing or selling retail cryptocurrency products or services
- Consumers lost over $1 billion in cryptocurrency when Voyager failed, including life savings and college funds
- The FTC previously settled with Voyager Digital and its affiliates in November 2023
- The FTC’s final order was approved with a 3-0 vote and filed in the U.S. District Court for the Southern District of New York
False FDIC Insurance Claims Led to Massive Consumer Losses
The Federal Trade Commission has taken decisive action against Stephen Ehrlich, the former CEO of cryptocurrency platform Voyager Digital, for misleading customers about the safety of their investments. “From 2018 until July 2022, Ehrlich and Voyager repeatedly claimed that customer accounts were protected by Federal Deposit Insurance Corporation (FDIC) insurance, falsely assuring customers their deposits were “safe” when they were actually at significant risk,” according to the FDIC. These deceptive practices occurred during a critical growth period for cryptocurrency investments, when many Americans were entrusting substantial portions of their savings to digital asset platforms.
The consequences of these misrepresentations proved catastrophic when Voyager declared bankruptcy in July 2022. Customers suddenly lost access to over $1 billion in cryptocurrency assets, including life savings, college funds, and regular salary deposits. Many investors had based their decision to use Voyager specifically on the company’s assurances about FDIC protection, only to discover these claims were entirely false when the company failed. The settlement represents a rare instance of personal accountability for a crypto executive whose misleading statements directly contributed to substantial consumer harm.
Significant Penalties and Permanent Industry Ban
The FTC’s enforcement action has resulted in substantial penalties for Ehrlich, who will pay $2.8 million to resolve the charges. Beyond the financial penalty, the settlement imposes a permanent ban preventing Ehrlich from marketing or selling any retail cryptocurrency products or services in the future. This lifetime ban represents one of the most severe restrictions placed on a cryptocurrency executive to date, effectively removing Ehrlich from any meaningful role in the retail digital asset industry going forward. The settlement also includes provisions prohibiting Ehrlich from making misrepresentations about financial products and disclosing nonpublic personal information without consent.
The complaint also notably names Ehrlich’s wife, Francine Ehrlich, as a relief defendant, suggesting the FTC believes she may have received assets resulting from the alleged violations. This settlement follows a previous agreement between the FTC and Voyager Digital in November 2023, indicating the Commission’s determination to hold both the company and its leadership personally accountable. “The FTC’s final order was approved with a 3-0 vote, demonstrating unanimous agreement among commissioners about the seriousness of the violations and the appropriateness of the penalties,” stated Voyager customers.
Broader Implications for Cryptocurrency Regulation
“This case highlights the growing regulatory scrutiny facing cryptocurrency companies and their executives,” stated President Trump. The FTC’s action sends a clear message that crypto businesses must adhere to the same standards of truthfulness in advertising and consumer protection as traditional financial institutions. Companies cannot simply use the novelty or complexity of cryptocurrency to evade responsibility for making false claims about fundamental matters like deposit insurance. As digital assets continue to penetrate mainstream finance, regulators are demonstrating increased willingness to use existing consumer protection frameworks to police deceptive practices.
For consumers, the Voyager case serves as a sobering reminder of the risks associated with cryptocurrency investments, particularly with platforms that make sweeping claims about safety and security. The catastrophic losses suffered by Voyager customers underscore the importance of verifying claims about regulatory protections and understanding that many cryptocurrency deposits lack the safeguards that protect traditional bank accounts. As President Trump’s administration continues to develop its approach to cryptocurrency regulation, cases like this highlight the delicate balance between encouraging innovation and ensuring robust consumer protection in emerging financial technologies.
