The Commodity Futures Trading Commission (CFTC), the regulatory body overseeing the derivatives industry in the United States, recently made an announcement regarding a legal judgment against Adam Todd and his affiliated companies. On July 5, Judge Roy K. Altman of the U.S. District Court for the Southern District of Florida issued a default judgment, granting a permanent injunction against Adam Todd and his companies, which include Digitex LLC, Digitex Limited, Digitex Software Limited, and Blockster Holdings Limited Corporation.
Operating under the trade name "Digitex Futures," Todd and his companies were found to have engaged in unlawful activities. They attempted to manipulate the price of DGTX, the native token of Digitex Futures, which is considered a commodity in interstate commerce. Additionally, they illegally offered futures transactions on a platform that was not a designated contract market, failed to register with the CFTC, and neglected to implement proper customer information programs, know your customer policies, and anti-money laundering procedures.
As a result of the judgment, Adam Todd and his companies are prohibited from trading in any CFTC-regulated markets or registering with the CFTC. Furthermore, Todd has been ordered to pay a disgorgement of $3,912,220 and a civil monetary penalty of $11,736,660. This resolution addresses the CFTC's enforcement action against Todd and Digitex Futures.
Ian McGinley, the Director of the Division of Enforcement, emphasized that this case exemplifies the CFTC's commitment to ensure entities are lawfully registered and to combat the manipulation of commodities in interstate commerce, regardless of the technology involved. McGinley noted that this order resolves yet another enforcement action against an individual and digital asset exchange that illegally offered futures contracts to U.S. customers.
The legal proceedings originated from a complaint filed on September 30, 2022, which alleged that Todd and Digitex Futures operated a digital asset derivatives exchange from Florida and actively solicited participation from U.S. customers despite being aware of U.S. regulation requirements.
The CFTC accused Todd of attempting to manipulate the price of DGTX, the native token of Digitex Futures, through various tactics. These included deploying a computerized bot designed to create artificial demand and filling large over-the-counter orders on third-party exchanges. Todd's actions were aimed at inflating the price of DGTX to benefit the Digitex "treasury," despite the knowledge that it would result in trading losses.
While the CFTC cautions that orders requiring payment to victims may not guarantee the recovery of lost funds, it remains steadfast in its commitment to protect customers and hold wrongdoers accountable.
The announcement serves as a reminder of the CFTC's continued efforts to safeguard the integrity of the derivatives industry and ensure compliance with regulations.
