The U.S. Commodity Futures Trading Commission (CFTC) filed a case against Sam Ikkurty, Ravishankar Avadhanam, and Jafia LLC for civil violations of the Commodity Exchange Act (CEA), specifically involving cryptocurrency investments. The court granted the CFTC’s motion for summary judgment on Monday, finding that the defendants misrepresented the performance of their crypto funds, operated a […]
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Report Claims Jump Trading Under CFTC Probe for Crypto Activities
The Commodity Futures Trading Commission (CFTC) has initiated an inquiry into the cryptocurrency activities of Chicago-based Jump Trading, according to a report by Fortune’s Leo Schwartz. This investigation forms part of a larger regulatory review, though it does not suggest any wrongdoing by the firm. Jump Trading Under CFTC Scrutiny Jump Trading, noted for its […]
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Donald Trump Viewed as ‘America’s First Crypto President’ by Former CFTC Chairman
Former Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo has emphasized former U.S. President Donald Trump’s critical role in the cryptocurrency industry, dubbing him “America’s first crypto president” due to the approval of bitcoin futures during his administration. Trump’s crypto stance has evolved significantly since he was in office. ‘Trump May Justifiably Claim to Be […]
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CFTC Takes Legal Action Against Kucoin, Highlights BTC, ETH, and LTC as Commodities
The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Kucoin, emphasizing the classification of bitcoin, ethereum, and litecoin as commodities. The enforcement action, launched in the U.S. District Court for the Southern District of New York, accuses Kucoin of multiple regulatory breaches involving these digital assets. Kucoin’s Legal Battles Shine a Bright […]
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Paradigm Backs Prediction Market in Legal Battle Against CFTC
Paradigm has stepped up to back Kalshi in its legal battle against the Commodity Futures Trading Commission (CFTC), defending the right to offer prediction markets in the U.S. Congressional elections, and arguing for the critical role such markets play in risk management and information dissemination within the crypto industry.
Legal Battle Brews as Paradigm Supports Kalshi’s Election Prediction Platform Against CFTC
Investment firm Paradigm has thrown its support behind prediction market platform Kalshi in its ongoing legal dispute with the CFTC. The contention arises from the CFTC’s rejection of Kalshi’s proposed market, which would allow participants to speculate on the outcome of U.S. Congressional elections, particularly regarding which party will control each chamber of Congress.
Paradigm submitted an amicus brief last week in favor of Kalshi’s lawsuit against the CFTC. This legal action was initiated after the CFTC disapproved of a prediction market on Kalshi on the outcome of this year’s Congressional elections, critiquing it as a form of wagering that is illegal under state laws. In November, Kalshi challenged the regulatory body, claiming it had overstepped its jurisdiction.
The crux of Paradigm’s argument, as detailed in their Policy Blog and amicus brief, is the belief in the transformative potential of prediction markets for the cryptocurrency industry. These markets, according to Paradigm, offer critical insights and a method for companies to mitigate regulatory risks. This is especially pertinent given the significant influence U.S. Congressional elections have on legislative actions, regulatory appointments, and overall business climate for crypto startups in the United States.
Paradigm emphasizes the utility of such event contracts in providing real-time information to not only market participants but also the general public, enhancing the predictive accuracy regarding electoral outcomes compared to traditional polling methods. The firm argues that enabling contracts on Congressional control aligns with public interest, urging the court to overturn the CFTC’s prohibition.
As both sides present their arguments, the outcome may set a precedent for how similar products are treated by regulators in the future, potentially shaping the intersection of cryptocurrency, prediction markets, and regulatory oversight.
Do you believe prediction markets about the outcomes of political events are dangerous? Share your thoughts and opinions about this subject in the comments section below.
AI Hype: CFTC Urges Investors to be Wary of AI-Created Crypto-Asset Arbitrage Algorithms
The Commodities Futures Trading Commission has urged investors to be wary of artificial intelligence-created algorithms which promise dubious returns on crypto asset investments. The commission said investors should conduct background research on the companies or individuals who offer such AI-created trading algorithms.
Scammers Use Social Media and Influencers to Spread False Information
The Commodity Futures Trading Commission (CFTC) has cautioned investors to be wary of artificial intelligence (AI) created software or algorithms that “yield 100 per cent ‘win’ rates.” The CFTC has identified crypto-asset trading schemes, trade signal strategies, or automated trading algorithms as some of the AI-created software which scammers are using to target investors.
In a statement issued through the CFTC’s Office of Customer Education and Outreach (OCEO), the commission also voiced its concerns over the growing number of cases in which criminals use the AI hype to steal from unsuspecting users.
According to the statement, this problem is further compounded by scammers’ spread of false information via social media platforms and through the so-called influencers. Unlike conventional media or advertising firms, influencers and social media platforms are not subject to regular marketing or advertisement rules. The statement nevertheless lists some steps investors should always take before committing their funds.
Importance Background Research
One such step is doing background research on a company or trader that is promising an AI-based investing or trading bot. Investors can also research the trading history of the company selling the AI-created algorithms. Furthermore, investors should also consider getting a second opinion as well as understanding the risks involved.
Remaking on why her office issued the advisory, OCEO Director Melanie Devoe, said:
When it comes to AI, this advisory is telling investors, ‘Be wary of the hype.’ Unfortunately, AI has become another avenue for bad actors to defraud unsuspecting investors.
In addition to warning investors about investment schemes or promotions that offer above-average or guaranteed returns, the OCEO advisory also helps investors identify and avoid potential scams. The advisory also reminds investors that no tool or technology, including AI, can predict the future.
What are your thoughts on this story? Let us know what you think in the comments section below.
CFTC Files Civil Enforcement Action Against Bogus Crypto Exchange Debiex
The U.S. commodities regulator revealed on Jan. 19 that it had filed a civil enforcement action against a bogus digital asset exchange platform. According to the Commission, Debiex customers were not aware that the entire set-up was a clever scam designed to dupe prospective investors.
Romance Scam Tactics
The Commodities Futures Trading Commission (CFTC) announced on Jan. 19 that it had filed a civil suit against Debiex, a bogus crypto exchange platform it accuses of fraudulently misappropriating .3 million in customer funds. The CFTC alleges that the exchange’s representatives used romance scam tactics to fleece millions from the five unnamed prospective investors.
The Commission also identified Zhāng Chéng Yáng as a relief defendant because he is suspected of enabling Debiex’s fraudulent acts at least once. Commenting on the Commission’s move to file a civil enforcement action against the defendants, the CFTC’s Director of Enforcement Ian McGinley, said:
“This case is an example of the Division of Enforcement’s core mission—bringing justice for victims, rooting out misconduct, and holding accountable those who violate the anti-fraud provisions of the CEA.”
Fake Websites and Money Mules
In its statement, the Commodities Futures Trading Commission (CFTC) explained how Debiex perpetrated the scam from March 2022 to the present. The elaborate scam included websites that mimic legitimate trading platforms, fake customer service, and money mules. Using these tools masterminds of the scheme were able to convince victims that Debiex was a bona fide crypto exchange, the CFTC added.
However, according to the Commission, Debiex customers were not aware that the entire set-up was a clever scam designed to dupe prospective investors.
The Commission in the meantime urged prospective investors to avoid falling victim to similar scams by always verifying a company’s registration with the CFTC before committing funds.
What are your thoughts on this story? Let us know what you think in the comments section below.
Defi Can Strengthen the United States’ Leadership in Tech and Financial Services, CFTC Report Says
Decentralized finance projects and their respective ecosystems potentially offer both promising opportunities and risks to the U.S. financial system, a Commodities Futures Trading Commission (CFTC) study has found. The CFTC study report recommends conducting a gap analysis against current capabilities and capacity and addressing critical gaps with more funding, personnel, and tools.
Decentralized Finance Can Help Narrow the Financial Exclusion Gap
According to a study conducted by the Commodities Futures Trading Commission, decentralized finance (defi) potentially brings with it both promising opportunities as well as risks “to the U.S. financial system, consumers, and national security.” Regarding the benefits, the Commission’s study report states that defi can offer opportunities ranging from greater transparency and efficiency to expanded access to basic financial products.
Decentralized finance projects or ecosystems can leverage their open technological architecture to provide financial products and services to virtually anyone, especially in jurisdictions where large populations are excluded from the financial system.
The study also found that decentralized finance can help strengthen the United States’ leadership in technology and the provision of financial services. According to the findings, strengthening the United States leadership is especially important now when countries like China have invested in technologies that not only seek to diminish their reliance on the dollar-based financial system but to challenge it.
However, the report also concluded that in the absence of “effective” regulation, enforcement, and compliance, decentralized finance projects and ecosystems will remain “vulnerable to fraud, mismanagement, and serious regulatory violations.” Also compounding matters are what the CFTC calls periods of extremely high market volatility which ultimately expose users and stakeholders to significant losses.
Many Defi Platforms are Neither Fully Decentralized nor Fully Centralized
Meanwhile, in her remarks accompanying the study report, CFTC Commissioner Christy Goldsmith Romero stated that the findings provide regulators with a foundational understanding of defi. In addition to outlining the benefits and risks of decentralized finance, the study report also notes that many defi platforms are neither fully decentralized nor fully centralized.
According to Goldsmith, an understanding of these aspects of decentralized finance and the defi ecosystem should help both regulators and industry players find common ground.
“I hope that this report can serve as a first step to facilitate a dialogue between policymakers and industry particularly because defi remains at the center of illicit finance risks, cyber hacks and theft,” the CFTC Commissioner said.
Besides identifying the benefits and risks posed by defi, the study report also recommends steps stakeholders should take to mitigate risks to investors, market integrity, and financial stability.
One of the recommendations calls for increased technical capacity and understanding of defi as well as mapping the existing landscape to measure and highlight interconnections and threat vectors. The report also recommends conducting a gap analysis against current capabilities and capacity and addressing critical gaps with more funding, personnel, and tools.
What are your views on the CFTC’s decentralized finance recommendations? Let us know what you think in the comments section below.
CFTC Chairman: Many Crypto Tokens Are Considered Commodities Under Existing Laws
The chairman of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, has stated that many digital assets are considered commodities under existing law. Behnam urged the U.S. Congress to hasten the process of establishing a regulatory regime for cryptocurrency. He also emphasized that he and Gary Gensler, the U.S. Securities and Exchange Commission chairperson, “get along quite well.”
Gap in Regulation
Rostin Behnam, the chairman of the Commodity Futures Trading Commission (CFTC), has stated that many digital assets or tokens are considered commodities under existing law. However, Behnam lamented the emergence of a gap in regulation and urged the U.S. Congress to step in.
“It is figuring out how existing, decades-old law, fits into this new technology that seems to be changing and ultimately needs a new way of thinking around policy and legislating,” says @CFTCbehnam on #crypto. “Under existing law, many of the tokens constitute commodities.” pic.twitter.com/F3JPjWq3wG
— Squawk Box (@SquawkCNBC) December 12, 2023
Unsurprisingly, the CFTC chairman’s view on crypto is seemingly at odds with U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler, who sees many altcoins, including XRP and ether (ETH), as securities. Besides insisting that most digital assets are securities, the SEC under Gensler’s stewardship is also accused of deliberately obfuscating crypto regulations.
U.S. Congress Urged to ‘Legitimize the Technology’
Consequently, some U.S. politicians, like Tom Emmer (R-MN), have called for Gensler’s removal and sought to restrict the SEC’s ability to carry out enforcement actions. They have also called for the speedy enactment of laws to regulate crypto.
When asked about the limited movement towards establishing a regulatory regime for digital assets, Behnam, who spoke on CNBC’s Squawk Box, acknowledged that progress has been slow. He declared that the U.S. Congress must move away from its stance of not wanting to legitimize the technology.
“Congress is gonna have to step in and overcome this feeling of not wanting to legitimize the technology and seeing this as not something that is tenable or sustainable. I mean it is here, it hasn’t gone away,” Behnam said.
Behnam also addressed the alleged turf war between the SEC and CFTC, stating that he and Gensler “get along quite well” and share similar values and interests, particularly when it comes to protecting markets. The CFTC chairman suggested that both organizations need to find a way to make the “decades-old law fit into this new technology.”
What are your thoughts on this story? Let us know what you think in the comments section below.
US Regulator CFTC Files Record Number of Crypto Enforcement Actions This Year
The Commodity Futures Trading Commission (CFTC) has revealed that it filed a record number of crypto enforcement actions this fiscal year. “In FY 2023, the CFTC brought 47 actions involving conduct related to digital asset commodities, representing more than 49% of all actions filed during that period,” the regulator shared.
Record Number of Crypto Enforcement Actions
The Commodity Futures Trading Commission (CFTC) released its enforcement results for Fiscal Year 2023 on Tuesday, showing “a record-setting number of digital asset cases.”
The regulator explained that its Division of Enforcement (DOE) “filed 96 enforcement actions charging fraud, manipulation, and other significant violations in diverse markets, including digital assets and swaps markets, resulting in over .3 billion in penalties, restitution, and disgorgement.”
Noting that his agency remains “laser-focused on stopping and deterring fraud and manipulation in the U.S.,” CFTC Chairman Rostin Behnam said:
I am proud of the Division of Enforcement’s groundbreaking work in the digital asset space, which resulted in a record number of cases.
The agency detailed that it “filed high-profile complaints addressing frauds by major exchanges, individual Ponzi-schemers, and others; obtained a first-of-its-kind litigation victory against a decentralized autonomous organization; charged and won another litigation victory against a digital asset futures platform; brought an innovative litigation involving cross-market manipulation in blockchains; and continued its efforts to protect the public in the decentralized finance space.”
Emphasizing that the CFTC has “cemented its reputation as a premier enforcement agency in the digital asset space,” the agency stated:
In FY 2023, the CFTC brought 47 actions involving conduct related to digital asset commodities, representing more than 49% of all actions filed during that period.
Among the high-profile cases pursued by the CFTC are those targeting Sam Bankman-Fried (SBF) and FTX, Binance, Voyager, and Celsius Network. Additionally, the CFTC took action against three decentralized finance (defi) platforms in September.
Some believe that the CFTC is better suited to oversee the crypto sector than the U.S. Securities and Exchange Commission (SEC). Several bills have been introduced in Congress to make the CFTC the primary regulator of the crypto spot markets.
What do you think about the CFTC filing a record number of enforcement actions against the crypto industry this year? Let us know in the comments section below.