Federal Court Fines Digitex Futures $15M for KYC and AML Failings

The Commodity Futures Trading Commission (CFTC) has made it public that the US District Court has issued a fine of $15 million to a Florida resident, Adam Todd and entities that operated the crypto exchange Digitex Futures for various CFTC violations, including breaching the Commodity Exchange Act.

As per the CFTC’s statements, the suspect and the crypto exchange were involved in illicit activities, including price manipulation of its native crypto token DGTX. Other than this, the exchange lacked the authorisation from the CFTC to offer future transactions.

In addition to these allegations, the court’s order also highlighted that the exchange failed to register with the country’s commodities commission, while the operators were also held questioned for not implementing a rigid set of due diligence procedures, know-your-customer compliance and anti-money laundering measures.

However, due to the negligence shown by the crypto operators, the court has enjoined the company from trading in any CFTC-regulated markets. Additionally, Digitex Futures can’t register with the CFTC in future.

The firm needs to pay over $15 million fine, including a civil financial penalty of $11.7 million and a disgorgement of $3.9 million. The Division of Enforcement Director Ian McGinley said, 

“The order finds that Todd attempted to manipulate Digitex’s native utility token, DGTX, by allegedly ‘pumping’ the token’s price through a computerised bot.”

While addressing this case, McGinley emphasised that the CFTC ensures compliance and addresses manipulation in the commodity markets, including emerging cryptocurrencies. The regulatory body came after the criminals and associated crypto exchanges after seeking participation from US-based clients through online solicitations.

Considering these emerging cases, government departments and commodity regulators, including CFTC, are raising their instances to enhance cybersecurity and compliance measures to mitigate emerging criminal activities.

Meanwhile, the commodity commission has onboarded Scott Lee, a crypto industry expert, as senior counsel and policy advisor, showing a positive gesture for the crypto industry.

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