Voyager CEO makes millions selling shares in 2021

Stephen Ehrlich, CEO of a bankrupt cryptocurrency exchange Voyager Digitalmade millions of dollars selling Voyager shares in February and March 2021, when the stock was close to its peak, nineteen months before the cryptocurrency lending firm filed for bankruptcy in July 2022, financial records show.

Ehrlich’s gains were driven by a stratospheric rise in Voyager’s share price, which skyrocketed from seven cents a share in October. 2020 to $26 per share by March 2021. Over the same period, Bitcoin is up 455% and Ethereum is up 688%.

Like Celsius with similar problems, the firm promised mammoth returns on assets that users have entrusted to them. But as cryptocurrency prices began to fall freely earlier this year, Voyager’s business proved unsustainable, leading the firm to freeze assets invested by retail investors in June and then file for bankruptcy in July. Voyager held $1.3 billion worth of client crypto assets distributed among 3.5 million active users. according to the bankruptcy filing.

Complex and opaque corporate structure, including reverse takeovers defunct Canadian mining corporation, acquisitions and divestments of Delaware limited companies, and advisory fees paid to insider limited companies make it difficult to ascertain how much the Voyager co-founder took home.

Based on corporate insider disclosures and Voyager documents, it appears that Erlich made over $30 million by dumping Voyager capital as the crypto lender’s shares neared an all-time high.

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

Erlich’s three biggest deals — totaling 1.4 million shares worth nearly $19 million — involved a $50 million secondary offering by Stifel Nicolaus in February 2021.

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

Many publicly traded companies have restrictions or predetermined trading plans for when top management and insiders can sell. In the United States, these 10b5-1 plans do not allow insiders to use “material non-public information” to gain an advantage or profit. In Canada, these plans are known as automatic disposal plans or ADSPs.

On December 31, 2021, months after these insider sales, Voyager announced the adoption of ADSP for Erlich and another chief operating officer, Gerard Hansche. Less than a month later, on January 20, 2022, Erlich announced the cancellation of ADSPs before any deals were completed on them.

“Even though the floor was well above the current share price, I felt it was in the best interest of investors to withdraw the plan,” Ehrlich said in an interview. Press release. “Based on our key financials, including revenue for the quarter ended December 31, 2021, as outlined in our January 5, 2022 press release, I believe Voyager is undervalued.”

Ehrlich did not respond to multiple requests for comment.

Voyager ran into trouble earlier this year when cryptocurrency prices fell over 70% from their peak last fall. In particular, the collapse of the Terra stablecoin, which was supposed to be pegged to the US dollar, caused a shock to the industry.

Voyager disclosed to creditors June 27 this hedge fund Capital Three Arrows defaulted on a $650 million loan Voyager provided with customer assets. Voyager insisted at the time that it would continue to fulfill customer withdrawals and redemptions.

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

July 6 crypto lender files for Chapter 11 bankruptcy protection, hiring white shoe firm Kirkland and Ellis and investment bank Moelis & Company to advise them in the process. From the very beginning of the process, many petitioners tried to regain access to their possessions.

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