On April 28, the SDNY entered a stipulated order permanently banning the former CEO of a cryptocurrency lending platform from advertising, marketing, promoting, offering or distributing any product or service used to deposit, exchange, invest or withdraw assets. The order resolves the FTC’s claims that the former CEO engaged in deceptive and unfair acts or practices in the marketing and sale of cryptocurrency lending and custody services in violation of Section 5 of the FTC Act and obtained customer information through false representations in violation of the GLBA. The former CEO neither admitted nor denied the allegations. In addition to the permanent ban, the order enjoins the defendant from misrepresenting the benefits, costs, restrictions or performance of any product or service and prohibits him from obtaining customer information through false, fictitious or fraudulent representations or disclosing nonpublic personal information without express informed consent.

The order includes a $4.72 billion monetary judgment against the former CEO, representing the alleged consumer injury, joint and several with other defendants “to the extent subsequently ordered.” The former CEO is required to pay $10 million to the FTC, which may be satisfied by an equivalent payment to DOJ pursuant to a forfeiture order in a related criminal case. The remainder of the judgment is suspended, premised on the truthfulness of the former CEO’s financial disclosures. The order further requires the former CEO to cooperate fully with the FTC and comply with 18-year reporting and recordkeeping obligations and establishes that the complaint’s allegations are deemed true for purposes of any future nondischargeability action under Section 523(a)(2)(A) of the Bankruptcy Code.

As previously covered by InfoBytes, in July 2023, the FTC and the corporate defendants proposed a separate stipulated order imposing a suspended $4.72 billion monetary judgment against the corporate defendants. The SDNY entered the stipulated order in August 2023, and the corporate entity has since emerged from bankruptcy and begun making payments to creditors, including consumer account holders.