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Voyager CEO made millions in stock sales in 2021

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Voyager CEO made millions in stock sales in 2021

Stephen Ehrlich, CEO of a failed cryptocurrency exchange digital travelmade millions of dollars selling Voyager shares in February and March 2021 when the shares were near their peak, nineteen months before the crypto lending firm filed for bankruptcy in July 2022, according to financial records.

Ehrlich’s gains were propelled by the stratospheric rise in Voyager’s share price, which rose from seven cents per share in October 2020 to $26 per share in March 2021. During the same period, Bitcoin rose 455% and Ether soared 688%.

Like Celsius, also embattled, the company promised the mammoth returns on the assets that users have entrusted to them. But as crypto prices went into freefall earlier this year, Voyager’s business proved unsustainable, leading the company to freeze assets that retail investors had deposited in June and then to declare bankruptcy in July. Voyager had custody of $1.3 billion in client crypto assets spread across 3.5 million active users, according to a bankruptcy filing.

A complex and opaque corporate structure – including a reverse takeover of a former canadian mining company, the acquisition and divestiture of Delaware LLCs, and advisory fees paid to insider LLCs – it’s hard to establish how much the Voyager co-founder brought home.

What is evident, based on company insider disclosures and Voyager filings, is that Ehrlich has made more than $30 million from selling Voyager shares while shares of the crypto lender approached a record high.

Ehrlich and his Delaware LLC sold nearly 1.9 million shares from February 9, 2021 to March 31, 2021, in 11 separate sales totaling $31 million, according to data from the Canadian Securities Administration.

Ehrlich’s three biggest deals — totaling 1.4 million shares worth nearly $19 million — were tied to a $50,000,000 secondary offering from Stifel Nicolaus in February 2021.

Voyager shares would peak at $29.86 per week after Ehrlich’s final sale on April 5, 2021. Three weeks later, VOYG shares had lost 41% of their value. In November 2021 – as the crypto market as a whole reached its peak – Voyager was down 69% from its peak.

Many publicly traded companies have restrictions or predetermined trading plans on when senior executives and insiders can execute sells. In the United States, these 10b5-1 plans prevent insiders from using “material nonpublic information” to gain advantage or profit. In Canada, these plans are known as Automatic Securities Disposition Plans, or ADSPs.

On December 31, 2021, months after these insider sales, Voyager announced the adoption of ADSPs for Ehrlich and another executive, COO Gerard Hanshe. Less than a month later, on January 20, 2022, Ehrlich announced the cancellation of the ADSPs before any transactions had been completed under them.

“Despite having a floor significantly above the current share price, I felt it was in the best interests of investors to withdraw the plan,” Ehrlich said in a statement. Press release. “Based on our key financial metrics, including revenue for the quarter ended December 31, 2021, as disclosed in our press release issued January 5, 2022, I believe Voyager is undervalued.”

Ehrlich did not respond to multiple requests for comment.

Voyager ran into trouble earlier this year as crypto prices fell more than 70% from their peak last fall. In particular, the collapse of a stablecoin, Terra, which was supposed to be pegged to the US dollar, sent shockwaves through the industry.

Traveler communicated to creditors on June 27, this hedge fund Capital of the Three Arrows had defaulted on a $650 million loan that Voyager had extended using customer assets. At the time, Voyager insisted it would continue to honor customer withdrawals and redemptions.

Five days later, Ehrlich’s firm frozen customer withdrawals, leaving millions of users without access to their crypto-assets. “It was an extremely difficult decision, but we believe it is the right one given the current market conditions,” Ehrlich said in a statement.

On July 6, the crypto lender filed for chapter 11 bankruptcy protection, engaging white shoe firm Kirkland and Ellis and investment bank Moelis & Company to advise them through the process. Many petitioners have moved to regain access to their assets since the start of the process.

The FDIC has since ordered Voyager to stop calling their FDIC-insured products, calling the claims “false and misleading.”

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