Key Takeaways:
- The CFTC sued Digitex and its founder, alleging that the company had neglected to apply for the necessary license to conduct its trading operations.
- The organization asserts that the company and its founder, Adam Todd, tried to pump their native coin while also failing to register with the CFTC.
For failing to report the cryptocurrency futures exchange and for manipulating the price of its DGTX token, the United States Commodity Futures Trading Commission (CFTC) has lodged a complaint against Digitex LLC and its founder and CEO Adam Todd.
In an attempt to boost Digitex’s holdings, Todd reportedly inflated the price of DGTX tokens, according to a court document filed on September 30 in the Southern District of Florida.
The U.S. regulator alleged that the CEO of Digitex engaged in an illegal conspiracy to establish and run a platform for trading in digital asset derivatives in violation of the Commodity Exchange Act.
Despite fitting the CFTC’s criteria of a designated contract market or foreign board of trade, Digitex Futures never applied to get registered as a futures commission merchant with the commission.
Additionally, according to the complaint, Digitex failed to execute efficient know-your-customer checks and a customer information program, as well as other obligations of the Bank Secrecy Act.
According to the lawsuit, the CFTC requested a court order preventing Todd and Digitex from transacting in digital asset transactions that are deemed commodities under the jurisdiction of the regulator.
The agency also wanted Digitex to pay impacted parties restitution, disgorgement, and civil monetary penalties. Both Digitex’s and its futures websites were unavailable at the time of publication.
The lawsuit stated that the defendants “are prepared to remain participants in the acts and practices claimed in this complaint and similar acts and practices” unless restrained and enjoined by this court.
The agency also announced Digitex’s plans to compensate affected parties with civil monetary penalties, disgorgement, and restitution. Both Digitex’s and its futures website were down at the time the article was written.
When it was first introduced in 2018, Digitex positioned itself as a decentralized marketplace for trading commodities, cryptocurrencies, and other types of assets.
The zero-fee concept was one of its advertised value propositions; expenses were to be met by creating the DGTX token and requiring all transactions to go through it.
By dispersing the liquidity across token holders rather than retaining it on the exchange’s primary servers, the technique was thought to decentralize the market.
As part of a “learning tour” on cryptocurrency and blockchain in September, CFTC commissioner Caroline Pham visited Ripple CEO, Brad Garlinghouse. At the time, the SEC was suing Ripple over whether the company’s XRP sales breached securities laws.
The CFTC has a reputation for being less antagonistic to the cryptocurrency business than the Securities and Exchange Commission (SEC).
Former CFTC Chairman J. Christopher Giancarlo recently asserted that the Commodity Futures Trading Commission (CFTC) should regulate cryptocurrency rather than the Securities and Exchange Commission in an interview with Yahoo Finance (SEC).
