Significant Ruling by the United States District Court for the Southern District of New York
In a landmark decision, Judge Gregory Woods of the United States District Court for the Southern District of New York has approved an order requiring Voyager Digital and its affiliates to pay $1.65 billion to the Federal Trade Commission (FTC) of the United States.
Settlement with the FTC
The ruling, submitted on November 28, 2023, stems from a settlement negotiated between Voyager and the Federal Trade Commission in October. This settlement represents a major development in the regulatory oversight of bitcoin lending companies.
Legal Action Against Voyager Digital
The Federal Trade Commission took legal action against Voyager Digital and its former CEO, Stephen Ehrlich, for making false statements about the security of consumer funds. They falsely claimed that client accounts were protected by the Federal Deposit Insurance Corporation (FDIC) during a time when the company was facing bankruptcy. This deceptive advertising led consumers to believe that their US dollar deposits were secure, resulting in significant losses when the company filed for bankruptcy in July of 2022.
Terms of the Settlement
As part of the settlement, Voyager is required to pay a penalty of $1.65 billion and is prohibited from promoting or providing goods or services related to digital assets. However, the punishment will be deferred to allow Voyager to compensate its clients. The company and its affiliates are also obligated to assist the FTC in ongoing investigations, including providing testimony and responding to discovery requests.
The bankruptcy filing by Voyager in July of 2022 revealed liabilities ranging from one billion to ten billion dollars. The case also includes claims of fraud and registration issues, with the Commodity Futures Trading Commission (CFTC) pursuing charges against former CEO Stephen Ehrlich. It’s important to note that the FTC settlement is separate from the bankruptcy proceedings and does not impact the scheme in which Voyager users are scheduled to receive a portion of their claims.
Rising Regulatory Measures in the Cryptocurrency Sector
This case underscores the increasing attention and regulatory measures being taken in the cryptocurrency sector, particularly regarding the protection and representation of consumer assets. The involvement of the FTC and the significant settlement amount exemplify a growing trend of regulatory agencies playing a more active role in overseeing cryptocurrency firms to safeguard consumer interests.
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### News source: blockchain.news