- Voyager Digital criticized for “bare-bones” due diligence.
- Voyager’s negligence led to billions in customer losses.
- Commissioner Kristin Johnson pointed out ignored warning signs.
A CFTC commissioner sharply criticized Voyager Digital for “bare-bones” due diligence that led to billions in customer losses before its bankruptcy.
Commissioner Kristin Johnson said Voyager ignored obvious warning signs and failed to exert oversight on how subsidiary firms handled client funds.
Johnson likened Voyager to a house of cards for shirking custodial responsibilities and blindly dispatching customer assets. She blamed these failures for its collapse.
Johnson’s comment follows CFTC’s lawsuit
Her comments followed the CFTC and FTC filing lawsuits against former Voyager CEO Stephen Ehrlich for alleged fraud. Voyager agreed to a separate $1.65 billion settlement with the FTC.
However, fellow commissioner Caroline Pham argued the CFTC may have overstepped its authority in deeming Voyager a commodity pool operator. She warned against regulatory overreach.
Pham said lending activities differ from trading derivatives, and reasonable crypto regulation must acknowledge this distinction.
The commission remains divided on the boundaries of CFTC jurisdiction over crypto activities like staking and lending. But Johnson’s forceful criticism highlights Voyager’s perceived negligence toward critics.
As crypto bankruptcies continue, regulators face growing pressure to deter mismanagement of customer deposits and balance protections with innovation.