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

article-image

Shutterstock.com/Mark Van Scyoc, modified by Blockworks

share

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. 


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

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

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg

Research

The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.

article-image

Plus, a dive into crypto’s ever-expanding unicorn club

article-image

Also, tokenization continues to grab headlines and one bitcoin miner stock soars Tuesday after inking a big deal

article-image

Fifteen million daily failed transactions disappeared from Solana

article-image

FTX debtors will pay the IRS $200M, with an outstanding lower priority claim of $685M

article-image

I’ve come to the realization that more attention is needed to create and sculpt the digital spaces where we live

article-image

The NYSE went down yesterday after a glitch caused a string of erroneous trades. Does DeFi fix this?