CFTC sues Digitex founder for illegal trading

CFTC sues Digitex founder for illegal trading
CFTC sues Digitex founder for illegal trading

The Commodities Futures Trading Commission (CFTC) has filed a lawsuit against crypto derivatives exchange Digitex and its founder and CEO, Adam Todd, for multiple violations of the Commodity Exchange Act (CEA). 

According to a court filing on Sept 30 in the Southern District of Florida, Todd failed to register the cryptocurrency futures exchange and allegedly manipulated the price of DGTX tokens to inflate the value of Digitex’s holdings.

CFTC claimed that Todd, who lives in Miami, used several corporate entities, including Digitex LLC, Digitex Ltd., Digitex Software Ltd. and Blockster Holdings Ltd. Corp., to flout laws and run an illegal digital asset derivatives trading platform. 

Per laws, exchanges are required to follow know-your-customer (KYC) procedures and verify customer information to prevent money laundering. The complaint alleged that Digitex didn’t perform any such verifications. 

In 2020, Todd had said that Digitex intended to remove all kinds of customer verifications to protect user information. 

CFTC seeks a court order blocking Digitex and Todd from engaging in any sort of digital asset transactions that might be considered securities under the laws. In addition, the agency wants Digitex to pay compensation under disgorgement, restitution, and civil monetary penalties. 

Following the news, DGTX, the native token of Digitex, fell over 10% and is currently trading at almost zero from last year’s high of $.02, according to data from Coinmarketcap. At press time, Digitex and its futures website were also down. 

Both CFTC and SEC have recently launched a string of lawsuits, and even embargos, on crypto-related organizations and people runnings those organizations. 

Last week, the CFTC imposed a penalty of $250,000 against the founders of bZerox, the company behind the bZx protocol, for “illegally offering leveraged and margined retail commodity transactions in digital assets.” 

Many in the crypto industry have criticized the actions of the regulators. 

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About the Author
Himan Mohapatra
Himan Mohapatra
Himan Mohapatra is an industry expert within the crypto-sphere and the primary journalist for Coinmash. He is passionate about finance and disruptive tech, such as blockchain. One can find him playing Valorant or FIFA when away from his desk.