CFTC wins battle against Digitex, platform is banned and founder on hook for $15M
The multimillion dollar judgment stemmed from a September 2022 CFTC complaint alleging Digitex was engaging in illegal digital asset derivatives trading
Shutterstock.com/Mark Van Scyoc, modified by Blockworks
In the latest example of regulation by enforcement, a judge from the Southern District of Florida issued a judgment in excess of $15.5 million against Digitex founder Adam Todd. He is accused of manipulating the price of his platform’s native DGTX token, among other charges.
The CFTC initiated this complaint against Digitex in late September 2022, calling Digitex “an illegal digital asset derivatives trading platform.”
Per the judge’s order, Digitex, all of its affiliated companies and Todd himself are banned from operating in CFTC-regulated markets and from even registering with the CFTC.
Todd will also have to return nearly $4 million of what the CFTC considers ill gotten gains and pay around $11.7 million in a civil penalty.
CFTC Division of Enforcement Director Ian McGinley said the judge’s order found Todd was engaging in a pumping scheme of the DGTX token through “a computerized bot.”
This activity was allegedly happening throughout the summer of 2020, when the Digitex exchange was in the midst of getting off the ground. The bot, according to the CFTC, was deployed on third-party exchanges that bought more DGTX than it was selling to benefit the reserves of the token within the Digitex treasury.
Additionally, the judge found that Todd illegally offered futures transactions, failed to register with the CFTC and did not implement a range of protection measures for the Digitex platform, including know your customer policies and anti-money laundering procedures.
The judgment was submitted on July 5, but was announced by the CFTC Wednesday.
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