Stephen Ehrlich, CEO of bankrupt cryptocurrency change Voyager Virtual, made tens of millions of bucks promoting Voyager stocks in February and March 2021 when stocks had been close to their top, nineteen months earlier than the crypto lending company declared chapter in July 2022, monetary information display.
Ehrlich’s positive factors had been propelled by way of the stratospheric building up in Voyager’s inventory worth, which rocketed from seven cents a proportion in Oct. 2020 to $26 a proportion by way of March 2021. In the similar length, Bitcoin rose 455% and Ether climbed 688%.
Like in a similar way embattled Celsius, the company promised mammoth returns on belongings that customers entrusted with them. However as crypto costs went into loose fall previous this yr, Voyager’s industry proved unsustainable, main the company to freeze belongings that retail buyers had deposited in June, then claim chapter in July. Voyager had custody of $1.3 billion in buyer crypto belongings unfold throughout 3.5 million energetic customers, in step with a chapter submitting.
A posh and opaque company construction – together with a opposite takeover of a defunct Canadian mining company, the purchase and disposition of Delaware restricted legal responsibility firms, and consulting charges paid out to insider LLCs – make it difficult to determine simply how a lot the Voyager co-founder took house.
What is obvious, in line with company insider disclosures and Voyager filings, is that Ehrlich revamped $30 million eliminating Voyager fairness because the crypto lender’s stocks neared an all-time prime.
Ehrlich and his Delaware LLCs offered just about 1.9 million stocks from February 9, 2021, to March 31, 2021, in 11 separate gross sales which totaled $31 million, in step with knowledge from the Canadian Securities Management.
The 3 greatest of Ehrlich’s transactions – totaling 1.4 million stocks value just about $19 million – had been attached to a $50,000,000 secondary providing by way of Stifel Nicolaus in February 2021.
Voyager stocks would top at $29.86 per week after Ehrlich’s ultimate sale on April 5, 2021. 3 weeks later, VOYG stocks had misplaced 41% in their worth. By way of November 2021 — because the crypto marketplace total was once peaking —Voyager was once down 69% from its top.
Many publicly traded firms have restrictions or pre-determined buying and selling plans on when senior executives and insiders can execute gross sales. In the US, those 10b5-1 plans save you insiders from the usage of “subject material private data” to achieve a bonus or benefit. In Canada, those plans are referred to as automated securities disposition plans, or ADSPs.
On December 31, 2021, months after those insider gross sales, Voyager introduced the adoption of ADSPs for Ehrlich and every other government, COO Gerard Hanshe. Not up to a month later, on January 20, 2022, Ehrlich introduced the cancellation of the ADSPs earlier than any trades had been finished underneath them.
“Regardless of having a ground considerably above the present inventory worth, I felt it was once in the most efficient hobby of the buyers to withdraw the plan,” Ehrlich stated in a press unlock. “In line with our key monetary metrics, together with revenues for the quarter ended December 31, 2021 as disclosed in our press unlock issued January 5, 2022, I imagine Voyager is undervalued.”
Ehrlich didn’t reply to more than one requests for remark.
Voyager bumped into bother previous this yr as crypto costs dropped greater than 70% from their top remaining fall. Specifically, the cave in of a stablecoin, Terra, which was once meant to be pegged to the U.S. buck, despatched shockwaves throughout the business.
Voyager disclosed to collectors on June 27 that hedge fund 3 Arrows Capital had defaulted on a $650 million mortgage that Voyager had prolonged the usage of buyer belongings. On the time, Voyager insisted it will proceed to honor buyer withdrawals and redemptions.
5 days later, Ehrlich’s company iced over buyer withdrawals, leaving tens of millions of customers with out get admission to to their cryptoassets. “This was once a significantly tough choice, however we imagine it’s the proper one given present marketplace prerequisites,” Ehrlich stated in a observation.
On July 6, the crypto lender filed for Bankruptcy 11 chapter coverage, attractive white-shoe company Kirkland and Ellis and funding financial institution Moelis & Corporate to advise them throughout the procedure. A lot of petitioners have moved to regain get admission to to their holdings for the reason that procedure started.
The FDIC has since ordered Voyager to stop calling their merchandise FDIC-insured, calling the claims “false and deceptive.”