According to recent reports, the US CFTC has sued Digitex Exchange and its CEO, Adam Todd. The regulator accused Todd of pumping the price of the company’s token, DGTX, to inflate its holdings.
US CFTC Sues Digitex Exchange For Having Poor KYC Rules
Recently, the US Commodity Futures Trading Commission (CFTC) accused the CEO of Digitex LLC of manipulating the price of the company’s token. Todd did this to increase the company’s holdings.
Also, the agency alleged that Todd did not register the crypto futures exchange. Meanwhile, the agency is seeking for the court to melt out civil financial penalties, restitution, disgorgement, and registration and trading bans against the CEO, Digitex, and its related companies.
The lawsuit filed on September 30th at a court in the Southern District of Florida accused Todd of violating the CFTC’s Commodity Exchange Act.
In detail, Todd supposedly used various entities to create and run an illegal crypto-asset derivatives platform. Meanwhile, the guidelines of the CFTC mandates derivatives firms to conduct regular Know Your Customer (KYC) checks.
These firms are also to implement a user information program. However, in 2020, Todd stated that he wanted to remove KYC requirements from Digitex.
According to him, this removal was to protect consumer data. Furthermore, the commodities regulator wants the court to block Digitex and Todd from carrying out transactions for digital assets that fall under commodities.
The CFTC Fines bZeroX LLC $250,000
Additionally, the watchdog wants the company to pay restitution, disgorgement, and civil penalties to the affected parties. Meanwhile, the platform of Digitex is currently offline.
The CFTC appears to be after bad actors in crypto space. Last week, the regulator fined bZeroX over $250,000.
This fine was after the company illegally offered margined and leveraged commodity transactions. Unfortunately, the CFTC still went to file a lawsuit against Ooki DAO, bZeroX’s successor.
In addition, the commission charged bZeroX for carrying out operations only allowed for futures commission merchants. The platform did not also adopt a user identification program.
Therefore, the commission is not leaving any stones unturned as it strives to bring bad actors in the crypto sector under the law. Meanwhile, several proponents in the crypto industry have accused the CFTC and the US SEC of using force in enforcing regulations.
The SEC has been in a year-long court battle with Ripple over its XRP sales years back. The regulator alleges that the sale violated its securities law which Ripple has denied.