CFTC Accuses Digitex of Shopping ‘Illegal’ Crypto Derivatives

The CFTC is seeking monetary penalties, to be determined by the court, and complete repayment of funds to all customers and investors impacted by the alleged violations

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • CFTC’s latest filing shows regulation by enforcement may be a trend here to stay
  • Digitex’s founder is also alleged to have been involved in a ‘pump and dump’ scheme for the exchange’s native token

As industry participants closely monitor how US cryptocurrency regulation is shaping up, the CFTC has yet another digital assets derivatives shop on its enforcement radar. 

The watchdog on Friday filed a complaint against Adam Todd, founder of futures and derivatives trading platform Digitex. 

According to the complaint, filed in the Southern District of Florida, Todd “owned, built, and operated an illegal digital asset derivatives trading platform.” 

Todd also “attempted to manipulate the price of DGTX,” the exchange’s native token, by trying to “pump” its price on third-party exchanges, the CFTC alleges. DGTX, now trading at a fraction of a cent, is down about 8% in the past hour, per Coinbase

The CFTC is seeking monetary penalties, to be determined by a judge — plus complete repayment of funds to all customers and investors impacted by the alleged violations. The regulator also hopes a judge will rule that the exchange must shut down.

“Unless restrained and enjoined by this Court, Defendants are likely to continue to engage in the acts and practices alleged in this complaint and similar acts and practices, as more fully described below,” the complaint said. 

Digitex’s website appeared to be down Friday following the filing. The exchange did not immediately respond to a request for comment. 

The filing comes shortly after the CFTC settled its charges against Ooki DAO predecessor  bZeroX. According to the regulator, bZeroX, as well as founders Tom Bean and Kyle Kistner, have been ordered to pay $250,000 for their roles in deploying, marketing and soliciting customers to undertake transactions that did not occur on a designated market contract. 

Ooki DAO now faces similar charges, the CFTC said, as the DAO is allegedly operating the same software as bZeroX. The regulator is seeking restitution, disgorgement, civil monetary penalties, trading and registration bans as well as injunctions against further violations.

The enforcement actions come amid an uncertain regulatory environment for cryptocurrencies, made increasingly murky by the continued jurisdictional battle between regulators.

Earlier this month, SEC Chair Gary Gensler said the CFTC can have authority over bitcoin and other unspecified “non-security tokens.” Gensler’s team can take the rest of the industry, he suggested, but the decision ultimately rests with Congress.

“The two agencies work very collaboratively,” ​​Valerie Szczepanik, director of the Strategic Hub for Innovation and Financial Technology (FinHub) office at the SEC, said during a panel discussion at the Digital Asset Summit in New York earlier in September. “From my perspective, the agencies really want to get it right. It’s all about investor protection and market integrity and our two agencies want to cover the landscape so those goals are achieved.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

RTK networks are critical to enabling a world of ubiquitous autonomous drones, vehicles, and industrial robots. We believe the GEOD token enables both a cost and product advantage for the GEODNET RTK network, which will allow it to out-compete multi-billion dollar incumbents Trimble and Hexagon.

article-image

As EIP-4844 “blobs” transform the economics of Ethereum layer-2s, a growing debate pits long-term scalability against immediate ETH value

article-image

Prosecutors argued that FTX co-founder Gary Wang cooperated in their case against former FTX CEO Sam Bankman-Fried

article-image

The two largest crypto exchanges respectively run the second- and sixth-largest Solana validators

article-image

MicroStrategy’s bitcoin buying has exploded — it now holds 1.7% of the asset’s circulating supply

article-image

The MiCA era will reward the prepared and punish the rest

article-image

The market is, presumably, confused about what a Trump win means for the social media company