CFTC takes legal action against crypto trading platform Digitex
The American trade regulator CFTC has filed a court complaint against Digitex LLC and its founder and managing director Adam Todd because the company is said to have not properly registered as a trading platform for crypto futures and to have manipulated the price of its own cryptocurrency DGTX.
According to the relevant court document dated September 30, Todd allegedly deliberately pushed up the price of DGTX in order to artificially inflate Digitex’s assets. In order to achieve this, the Digitex CEO is said to have used several sub-companies, which, among other things, also operated the illegal crypto trading platform, which in turn violates the Commodity Exchange Act.
Trading Commission regulations require crypto exchanges to collect detailed customer data. However, in 2020, Todd announced that he would remove all such Know Your Customer (KYC) measures from the platform to protect user data.
With the filing of the complaint, the CFTC now wants to ensure that Todd and Digitex are no longer allowed to trade any cryptocurrencies or crypto derivatives that fall under the supervision of the CFTC. In addition, Digitex is to make fines and compensation payments to injured users. At the time of writing, both Digitex’s main page and the platform’s futures trading page are offline.
The two most important American financial regulators, the CFTC and the SEC (stock exchange regulator), have been criticized by the crypto industry for taking a “regulation through law enforcement” approach. While the SEC is currently pursuing a high-level lawsuit against blockchain service provider Ripple and its cryptocurrency XRP, CFTC Commissioner Caroline Pham recently met with Ripple boss Brad Garlinghouse to learn more about crypto and blockchain.