Stephen Ehrlich, the former CEO of Voyager Digital, a now-defunct cryptocurrency lender, has been charged with fraud by the U.S. Commodity Futures Trading Commission (CFTC). Accusations against Ehrlich and his company include making false promises of high-yield returns to investors while violating derivatives rules. Additionally, Ehrlich is being sued by the Federal Trade Commission (FTC).
The Lawsuit Against Stephen Ehrlich and Voyager Digital
The CFTC has filed a lawsuit against Stephen Ehrlich, the co-founder and former CEO of Voyager Digital, in the U.S. District Court for the Southern District of New York. The complaint alleges fraud and registration failures related to the operations of Voyager and an unregistered commodity pool.
Furthermore, the U.S. regulator has claimed that Ehrlich and the company falsely promoted Voyager as a "safe haven". They promised potential customers the opportunity to earn high-yield returns of up to 12% to encourage the purchase and storage of digital assets on their platform.
Comments from CFTC Director of Enforcement
Ian McGinley, the CFTC Director of Enforcement, commented on the legal action against Ehrlich and Voyager, stating that they had lied to their customers. He added that while the duo pledged to handle customers' digital assets safely and responsibly, they secretly took significant risks with these assets. This led to Voyager's bankruptcy and massive customer losses.
Allegations of Reckless Risk Taking
According to the CFTC, Ehrlich and Voyager pooled and transferred billions of dollars of customer digital assets as "loans" to high-risk third parties. For instance, in early 2022, they transferred more than $650 million of customer funds to a digital assets hedge fund, known as "Firm A", without conducting proper due diligence.
Voyager Digital filed for bankruptcy in early July 2022 following volatile crypto markets and the collapse of the Three Arrows Capital (3AC) hedge fund. The latter defaulted on a $650 million loan from Voyager, triggering a crash that resulted in U.S. customer losses totaling $1.7 billion.
Continued Deception
McGinley further alleged that as their business began to crumble, Ehrlich and Voyager continued to deceive their customers by hiding the true state of Voyager's financial health. They allegedly compounded their fraud by operating in roles requiring CFTC registration, which they failed to secure.
FTC's Legal Action
The FTC, the U.S. antitrust and consumer protection agency, also sued Ehrlich for falsely alleging that customers could depend on Federal Deposit Insurance protection for their assets. Both Ehrlich and Voyager were charged with violating the FTC Act and the Gramm-Leach-Bliley Act.
Ehrlich's Response to the Allegations
Ehrlich expressed his outrage and deep dismay at the allegations from the two regulatory bodies in a statement cited by the media. He claimed that he was being used as a scapegoat and blamed others in the industry for the losses experienced by Voyager's customers and creditors.
Legal Actions Against Voyager and Ehrlich: Your Thoughts
The legal actions brought by the CFTC and the FTC against Voyager and its former CEO, Stephen Ehrlich, have stirred considerable debate. What's your perspective on this issue? Share your thoughts in the comment section below.
Frequently Asked Questions
How much tax is gold subject to in an IRA
The fair market price of gold when it is sold determines the tax due on its sale. You don't have tax to pay when you buy or sell gold. It's not considered income. If you sell it later, you'll have a taxable gain if the price goes up.
As collateral for loans, gold is possible. Lenders try to maximize the return on loans that you take against your assets. Selling gold is usually the best option. This is not always possible. They may keep it. They might decide to sell it. In either case, you risk losing potential profits.
So to avoid losing money, you should only lend against your gold if you plan to use it as collateral. It is better to leave it alone.
What amount should I invest in my Roth IRA?
Roth IRAs let you save tax on retirement by allowing you to deposit your own money. These accounts are not allowed to be withdrawn before the age of 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. You cannot touch your principal (the amount you originally deposited). This means that regardless of how much you contribute to an account, you cannot take out any more than you initially contributed. If you wish to withdraw more than you originally contributed, you will have to pay taxes.
The second rule says that you cannot withdraw your earnings without paying income tax. When you withdraw, you will have to pay income tax. Let's assume that you contribute $5,000 each year to your Roth IRA. Let's also assume that you make $10,000 per year from your Roth IRA contributions. On the earnings, you would be responsible for $3,500 federal income taxes. You would have $6,500 less. This is the maximum amount you can withdraw because you are limited to what you initially contributed.
The $4,000 you take out of your earnings would be subject to taxes. You'd still owe $1,500 in taxes. You'd also lose half the earnings that you took out, as they would be subject to a second 50% tax (half of 40%). So, even though you ended up with $7,000 in your Roth IRA, you only got back $4,000.
There are two types: Roth IRAs that are traditional and Roth. Traditional IRAs allow you to deduct pretax contributions from your taxable income. Your traditional IRA allows you to withdraw your entire contribution plus any interest. A traditional IRA can be withdrawn up to the maximum amount allowed.
A Roth IRA doesn't allow you to deduct your contributions. After you have retired, the full amount of your contributions and accrued interest can be withdrawn. There is no minimum withdrawal amount, unlike traditional IRAs. It doesn't matter if you are 70 1/2 or older before you withdraw your contribution.
What Is a Precious Metal IRA?
A precious metal IRA allows for you to diversify your retirement savings in gold, silver, palladium and iridium. These precious metals are extremely rare and valuable. These are excellent investments that will protect your wealth from inflation and economic instability.
Precious metals often refer to themselves as “bullion.” Bullion refers actually to the metal.
Bullion can be bought via various channels, such as online retailers, large coin dealers and grocery stores.
With a precious metal IRA, you invest in bullion directly rather than purchasing shares of stock. You'll get dividends each year.
Precious metal IRAs are not like regular IRAs. They don't need paperwork and don't have to be renewed annually. Instead, you pay a small percentage tax on the gains. Additionally, you have access to your funds at no cost whenever you need them.
Which precious metal is best to invest in?
The answer to this question depends on how much risk you are willing to take and what type of return you want. Although gold has been considered a safe investment, it is not always the most lucrative. For example, if your goal is to make quick money, gold may not suit you. If patience and time are your priorities, silver is the best investment.
If you don't care about getting rich quickly, gold is probably the way to go. However, silver might be a better option if you're looking for an investment that provides steady returns over long periods.
Statistics
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
External Links
finance.yahoo.com
cftc.gov
law.cornell.edu
- 7 U.S. Code SS7 – Designation board of trade as contract marketplaces
- 26 U.S. Code SS 408 – Individual retirement accounts
wsj.com
- Saddam Hussein’s InvasionHelped Uncage a Bear In 1989 – WSJ
- How do you keep your IRA Gold at Home? It's Not Exactly Lawful – WSJ
How To
Three ways to invest in gold for retirement
It is crucial to understand how you can incorporate gold into your retirement plans. There are many ways to invest in gold if you have a 401k account at work. You may also want to consider investing in gold outside of your workplace. If you have an IRA (Individual Retirement Account), a custodial account could be opened at Fidelity Investments. Or, if you don't already own any precious metals, you may want to consider buying them directly from a reputable dealer.
If you do invest in gold, follow these three simple rules:
- You can buy gold with your cash – No need to use credit cards or borrow money for investment financing. Instead, invest in cash. This will protect you from inflation and help keep your purchasing power high.
- Physical Gold Coins – Physical gold coins are better than a paper certificate. Physical gold coins are easier to sell than certificates. There are no storage fees for physical gold coins.
- Diversify your Portfolio. This is how you spread your wealth. You can invest in different assets. This can reduce market volatility and help you be more flexible.
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By: Lubomir Tassev
Title: Former Voyager Digital CEO Faces Fraud Charges from US Regulators
Sourced From: news.bitcoin.com/cftc-sues-former-ceo-of-crypto-lender-voyager-for-fraud/
Published Date: Sat, 14 Oct 2023 04:30:09 +0000
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