US CFTC Charges Crypto Futures Exchange Digitex for Registration and Trading Violations

The US Commodity Futures Trading Commission, (CTFC), has charged Crypto futures exchange Digitex was sued by its CEO Adam Todd and several other violations of the Commodity Exchange Act.

According to the regulator’s filing, as seen on Friday in the Southern District of Florida, the CTFC’s complaint accused Todd of using various corporate entities – including Digitex LLC, Digitex Ltd., Digitex Software Ltd., and Blockster Holdings Ltd. Corp., – to run an illegal crypto derivatives trading platform.

The watchdog found that Digitex Futures exchange fulfilled the definition of a designated contract market or foreign trade board, but was not registered with the CTFC to be a futures commission merchant. This violated the CEA.

The CTFC accused Todd and the entities of failing to implement proper know-your-customer checks and a customer information program as required by the Bank Secrecy Act – a violation that can land lawbreakers in jail for up to five years.

The CTFC further alleges that Todd attempted to manipulate the price of the exchange’s native token, DGTX, using noneconomic trading to “pump” its price higher. According to the regulator Todd allegedly bought tokens not in the purpose of making any money, but with the intent to artificially boost the value of the exchange’s holdings through the pumping of the price of the token.

The regulator stated that unless restrained or enjoined, defendants are likely to continue engaging in the acts and practice alleged in this case and similar acts and behaviors.”

The CFTC is seeking full restitution from defrauded participants. This includes disgorgement, civil monetary penalty, trading, and registration banning Todd and Digitex-related companies.

The agency’s enforcement action is the latest in a recent series of crypto-related lawsuits brought by the watchdog, which appears to be an ongoing regulatory crackdown on rulebreakers in the cryptocurrency and other digital asset trading platforms.

Image source: Shutterstock



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