A federal court in the United States has mandated that Adam Todd, the CEO of the digital asset exchange Digitex, pay almost $16 million in disgorgement and penalties. The Commodity Futures Trading Commission (CFTC) filed a complaint against Digitex and Todd for suspected price manipulation and non-registration, which led to this decision.
The CFTC initially filed charges against Digitex and Todd in September 2022. The charges were related to the alleged manipulation of the price of the Digitex Futures native token, DGTX, and the failure of the company to register with the CFTC. Todd allegedly used a computerized bot to artificially inflate the price of DGTX. The bot was reportedly deployed on third-party exchanges in 2020 to buy more of the token than it sold.
The court’s ruling prohibits Todd and the four businesses he controls from trading in any CFTC-regulated markets: Digitex LLC, Digitex Limited, Digitex Software Limited, and Blockster Holdings Limited Corporation. In addition to the prohibition, the ruling mandates that Todd and his businesses pay a civil monetary penalty of $11,736,660 as well as $3,912,220 in disgorgement.
The CFTC’s enforcement action against Todd and Digitex Futures has now been resolved with this order. However, it’s important to note that the $16 million order or additional financial penalties may not necessarily result in repayment to Digitex users.
The regulatory scrutiny that cryptocurrency companies must endure is starkly shown by this example. It emphasises the need of abiding by legal requirements, such as those pertaining to registration and the outlawing of manipulative trading practises.
In line with the SEC, the CFTC is taking action to ensure entities are lawfully registered and to address the manipulation of commodities.
On March 27, 2023, the CFTC filed a civil enforcement action against Changpeng Zhao, CEO of Binance, and three entities operating the Binance platform for numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations. The complaint also implicates Samuel Lim, Binance’s former chief compliance officer, with aiding and abetting Binance’s violations. The CFTC seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations.