Crypto Exchange Digitex Ordered to Pay $16M Following CFTC Charges

Crypto Exchange Digitex Ordered to Pay $16M Following CFTC Charges

A US court
has ordered Adam Todd to pay approximately $16 million for operating an
unregistered crypto exchange Digitex Futures. The amount includes $11.7 million
in civil monetary penalty and $3.9 million as the return of illicit
profit.

Court Slams Trading Ban on Digitex Founder

Judge Roy
K. Altman of the US District Court for the Southern District of Florida
delivered the judgement on July 5, the Commodity Futures Trading Commission
(CFTC) announced
today (Wednesday). Judge Altman also banned Todd and four companies he
controlled from registering with the CFTC or engaging in any trading activities
overseen by the US derivatives regulator.

CFTC in
September last year charged Todd
and his digital asset derivatives trading firm, alleging that the exchange between
May 2020 and May 2022 operated an unauthorized trading platform from a Florida-based office. The derivatives watchdog also accused the Digitex Founder of attempting to
manipulate the price of the exchange’s native token, DGTX. In addition, it considers the token to be a 'commodity’ in interstate commerce.

“According
to the complaint, throughout the summer of 2020—the time when the exchange was
readying for ‘launch’—Todd repeatedly attempted to, in his words, ‘pump’
the price of DGTX as reported by third-party exchange,” CFTC explained.

Furthermore, CFTC alleged that Digitex failed to establish a customer
information program, know-your-customer policies and anti-money laundering
procedures.

“This case
demonstrates that regardless of the technology used, the CFTC will aggressively
use its well-established authority to ensure entities are lawfully registered
and to address the manipulation of commodities in interstate commerce,” noted
Ian McGinley, Director of CFTC’s Division of Enforcement.

Court
Orders LBRY to Pay $111K

Meanwhile,
a district court in New Hampshire yesterday ordered LBRY, a blockchain-based
file-sharing and payment network, to pay $111,614 in civil penalty for
operating without registration. The US Securities and
Exchange Commission (SEC) disclosed this in a statement released today.

The
securities regulator sued LBRY in March 2021, alleging that the firm was
running an unauthorized platform and offering unregistered securities. SEC
initially asked the court to slam a $22 million penalty on LBRY for allegedly pooling $11
million from its
unauthorized activities. However,
in May it requested the court to reduce the amount to $111,614, because the firm
was “defunct, ceasing operations, and without the funds to pay a larger fine.”

“In
November 2022, the court granted summary judgment in favour of the SEC, holding
that LBRY offered and sold LBC in violation of Section 5 of the Securities Act
of 1933, the registration provisions of the federal securities laws,” SEC
explained in the statement. “The court
rejected LBRY’s claim that it lacked fair notice of the application of those
laws to its offer and sale.”

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This article was written by Solomon Oladipupo at www.financemagnates.com.

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