1.11 - Commodity Futures Trading Commission (CFTC)

NOTE: THE CFTC IS RAPIDLY PRODUCING TESTIMONY / GUIDANCE / ALERTS / ENFORCEMENT ACTIONS IN THIS SPACE. THIS PAGE MAY NOT BE ENTIRELY UP TO DATE. PLEASE DO YOUR OWN RESEARCH AND SEEK THE ADVICE OF AN ATTORNEY.

Overview

The CFTC is the federal agency that regulates the U.S. derivatives markets, including futures, swaps, and commodity options. Each of those assets must be traded on organized and regulated exchanges pursuant to the Commodity Exchange Act (CEA), 7 U.S.C. § 1. The CFTC also has general anti-fraud and anti-manipulation authority over “any . . . contract of sale of any commodity in interstate commerce.” 7 U.S.C. § 9(1).The CEA defines a commodity as a wide variety of farm products and “all other goods and articles, . . . and all services, rights, and interests . . . in which contracts for future delivery are presently or in the future dealt in.” 7 U.S.C. § 1a(9).

The CFTC started becoming extremely active in regulatory oversight of cryptocurrencies as commodities in late 2014 and early 2015. By September of 2015, the CFTC concluded explicitly that “Bitcoin and other virtual currencies are encompassed in the definition and properly defined as commodities,” but provided no other analysis at the time as to why that was the case. See In re Coinflip, Inc. d/b/a Derivabit, and Francisco Riordan, CFTC Docket No. 15-29, at 3 (2015.09.17).

Since 2015, the CFTC’s outpouring of statements, remarks, testimony before Congress, guidance, and enforcement actions has rendered it second only to the SEC in sheer volume of work in regulating a new asset class. The CFTC — the only federal agency to do so — has even gone as far as proposing in the Federal Register an interpretation of its regulations for retail commodity transactions that include “actual delivery” of digital assets, seeking comment, and then publishing a final interpretive guidance. That guidance clarifies the agency’s position on the distinction between cash or spot markets on the one hand (to which the CFTC’s oversight is limited to fraud or market manipulation), and futures markets on the other (overwich the CFTC exercises almost exclusive regulatory authority).

More recently, the CFTC asserted that “[w]hile its regulatory oversight authority over commodity cash markets is limited, the CFTC maintains general anti-fraud and manipulation enforcement authority over virtual currency cash markets as a commodity in interstate commerce.” CFTC, The CFTC’s Role in Monitoring Virtual Currencies, at 2 (2020). That statement came after two federal trial courts agreed with its position. See CFTC v. Patrick K. McDonnell & Cabbagetech, Corp. d/b/a Coin Drop Markets, 287 F. Supp. 3d 213, 228 (E.D.N.Y. 2018.03.06) (“Virtual currencies can be regulated by CFTC as a commodity. Virtual currencies are ‘goods’ exchanged in a market for a uniform quality and value.”); CFTC v. My Big Coin Pay, Inc., No. 1:18-cv-10077-RWZ, at 5–8 (D. Mass. 2018.09.26) (concluding that commodities are defined by categories or classes, not individual items, and because “My Big Coin is a virtual currency and it is undisputed that there is futures trading in virtual currencies” the CFTC sufficiently alleged it was a “commodity” subject to its enforcement authority).

The vast majority of the CFTC’s work in this area — much like its initial determination of virtual currency’s status as a commodity — has been through enforcement actions against market participants, largely in the areas of fraudulent schemes, failure to register, off-exchange transactions, price manipulation, and KYC/CIP/AML failures. See Nat’l Law Review, The CFTC’s Approach to Virtual Currencies (2020.12.21). The CFTC’s overarching approach is thus quite similar to the SEC, and the agencies have repeatedly acknowledged the coordination of their efforts in this space. See, e.g., CFTC, FinCEN, and SEC, Joint Statement on Activities Involving Digital Assets (2019.10.11).

Guidance

Primer on Virtual Currencies

The CFTC began its public guidance with its primer on virtual currencies in 2017. CFTC, A CFTC Primer on Virtual Currencies (2017.10.17). The primer lays out the basics of cryptocurrencies and the blockchain and then set forth plainly the CFTC’s position that: (1) virtual currencies are commodities; (2) the CFTC has jurisdiction over virtual currencies “when a virtual currency is used in a derivatives contract, or if there is fraud or manipulation involving a virtual currency traded in interstate commerce.” Id. at 11. It further provided the important caveat that “the CFTC generally does not oversee ‘spot’ or cash market exchanges and transactions involving virtual currencies that do not utilize margin, leverage, or financing.”

It also gave examples of activity that would trigger enforcement action: price manipulation; pre-arranged/wash trading in an exchange-traded virtual currency swap or futures contract; unregistered options/futures trading; and off-exchange, financed transactions targeted to retail customers. Id. __ at 13.

Background on Self-Certified Contracts for Bitcoin Products

Two months later, the CFTC provided a brief but interesting behind the scenes look at how the Chicago Mercantile Exchange and the CBOE Futures Exchange self-certified new contracts for bitcoin futures products and the Cantor Exchange self-certified a new contract for bitcoin binary options. CFTC, Office of Public Affairs, CFTC Backgrounder on Self-Certified Contracts for Bitcoin Products (2017.12.01).

Despite the normal one-day listing period for self-certification to bring new products to market, all three exchanges worked directly with the CFTC in advance, providing it “with advanced draft contract terms and conditions for their bitcoin contracts.” Id. at 1. That enabled “many discussions” regarding the contracts, compliance concerns, and systemic impacts. Two of the exchanges provided the CFTC “with information about how they intend to manage risks associated with bitcoin futures,” while the other planned to fully margin its contracts and thus did “not raise the same type of risk issues.” Id. Those subject to the the CFTC’s jurisdiction would likely do well to follow a similar approach to avoid significant scrutiny and fines down the road.

Further Refining Its Guidance

In the first half of 2018, the CFTC provided further guidance to its approach to regulating virtual currencies. It asserted that it would do so through a five-pronged approach: (1) consumer education; (2) asserting legal authority; (3) market intelligence; (4) robust enforcement; and (5) government-wide coordination. Among those prongs, the CFTC twice mentioned that it would focus on fraud and manipulation, particularly in spot or cash markets. CFTC, Office of Public Affairs, CFTC Backgrounder on Oversight of and Approach to Virtual Currency Futures Markets, at 1–2 (2018.01.04)

It also clarified that the process it had engaged in with the exchanges that had self-certified futures products, indicating that it had devoted a team to engage in “heightened review” of these products. That heightened review involves the staff checking for: (1) substantially high initial and maintenance margin for cash-settled Bitcoin futures; (2) large trader reporting thresholds at five bitcoins or less; (3) information sharing agreements with spot market platforms; (4) price settlement data monitoring; (5) agreement to engage in inquiries even at the trade settlement level; (6) agreement to regular coordination with the CFTC surveillance staff on trade activities; and (7) coordinating product launches to enable “minute-by-minute” moniotring by the CFTC. Id. at 3.

It also issued a separate guidance “to exchanges and clearinghouses on certain enhancements when listing a derivative contract based on virtual currency” through self-certification or voluntary submission for CFTC review and approval. CFTC, Staff Advisory No. 18-14, Advisory with Respect to Virtual Currency Derivative Product Listings (2018.05.21). This additional guidance reiterated in further detail the points above, and added the expectation that (a) exchanges launching new products also seek feedback on the potential product not just from those interested in trading it, but also “members and other relevant stakeholders,” and (b) derivatives clearing organizations have robust risk managements programs in place that demonstrate margin requirements are sufficient to “to adequately cover potential future exposures to clearing members based on an appropriate historic time period.” Id. at 5–6.

Accepting Virtual Currencies from Customers Into Segregation

In late 2020, the CFTC provided guidance to futures commission merchants (FCMs) on accepting virtual currencies from their customers. CFTC, Division of Swap Dealer and Intermediary Oversight, Accepting Virtual Currencies from Customers into Segregation (2020.10.21). The guidance was aimed at ensuring FCMs maintain adequate reserves to cover losses caused by defaulting customers, recognizing the potential increased risks that the volatile value of virtual currency poses for FCMs’ ability to do so.

To that end, the CFTC listed 12 different criteria for FCMs accepting virtual currency from customers and holding it as segregated funds. Among those requirements are that the deposits be into a traditional financial institution, another FCM, or another clearing organization; the funds must be deposited into a separate account that clearly identifies the customer; the FCM’s own virtual currency holdings cannot be deposited into customer accounts for any reason; the amount of currency “reasonably relates” to the amount to the customer’s level of trading; and the FCM must provide 45 days’ “prior written notice to all futures and cleared swaps customers that the FCM will begin accepting virtual currency as of a specified date.” Id. at 3–6.

Curiously, the guidance applies only to futures contracts that provide for the “physical delivery” of the underlying virtual currency. Id. at 1. The CFTC does not define what “physical delivery” means in this context. Presumably it means something akin to actual delivery of the virtual currency.

Rulemaking

Although the CFTC has not issued a rule, it has issued binding interpretive guidance. That guidance deals with an exception to the CFTC’s jurisdiction vis-à-vis retail customers and came two and half years after its first proposal. CFTC, Final Interpretive Guidance, Retail Commodity Transactions Involving Certain Digital Assets, 85 Fed. Reg. 37734 (2020.06.24) (the “Guidance”); CFTC, Release No. 8139-20, CFTC Issues Final Interpretive Guidance on Actual Delivery for Digital Assets (2020.03.24); CFTC, Retail Commodity Transactions Involving Virtual Currency, 82 Fed. Reg. 60335 (2017.12.20) (proposed interpretation; request for comment); see also CFTC, Request for Input, Request for Input on Crypto-Asset Mechanics and Markets, 83 Fed. Reg. 64563 (2018.12.17)

The Commodity Exchange Act generally applies to retail (i.e., not commercial) commodities contracts entered “on a leveraged or margined basis, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis.” Guidance, 85 Fed. Reg. 37334; 7 U.S.C. § 2(c)(2)(D)(iii). The statute provides an exception, however, when the contract for sale “results in actual delivery within 28 days or such other longer period as the Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity involved.” 7 U.S.C. § 2(c)(2)(D)(ii)(III)(aa) (emphasis added).

The CFTC’s interpretive guidance focuses on what “actual delivery” means with respect to digital assets, and thus where it views the limits of certain aspects of its regulatory power. To that end, the CFTC concludes “actual delivery” with respect to virtual currency occurs when

(1) A customer secures: (i) Possession <em>and</em> control of the entire quantity of the commodity, whether it was purchased on margin, or using leverage, or any other financing arrangement, and (ii) the ability to use the entire quantity of the commodity freely in commerce (away from any particular execution venue) no later than 28 days from the date of the transaction and at all times thereafter; and

(2) The offeror and counterparty seller (including any of their respective affiliates or other persons acting in concert with the offeror or counterparty seller on a similar basis) do not retain any interest in, legal right, or control over any of the commodity purchased on margin, leverage, or other financing arrangement at the expiration of 28 days from the date of the transaction.

Guidance, 85 Fed. Reg. 37742–43. It then goes on to provide five examples of what applying this interpretation to various scenarios of when virtual currencies are actually in the possession in control of the purchaser. Id. at 37743–44.

Examples of actual delivery include: (1) virtual currency being transferred from the seller’s blockchain address to the purchaser’s; or (2) the seller delivers the virtual currency into the depository under the purchaser’s full control and free of liens relating to margin or leverage. Id.

Examples of when there is not actual delivery include: (1) the virtual currency is not transferred from the seller to a depository under the purchaser’s control, or the purchaser’s address on the blockchain; (2) only a book entry showing delivery occurs, but the purchaser does not obtain full control through a depository or receive the virtual currency at its blockchain address; and (3) the purchase is “rolled, offset against, netted out, or settled in cash or virtual currency (other than the purchased virtual currency) between the customer and the offeror or counterparty seller (or persons acting in concert with the offeror or counterparty seller).” Id.

Statements & Testimony

The sitting Chairman of the CFTC, Rostin Behnam, has opined in recent months both in public speeches and in testimony before Congress that a key role for the CFTC is to use its enforcement power to prevent fraud, deception, and manipulation perpetrated against consumers in virtual currency and digital asset markets. Indeed, he has remarked that since 2014 the CFTC has been “aggressive in using its limited fraud and manipulation authority in the digital asset space” by bringing “50 enforcement actions (24 of which alleged fraud).” Chairman Rostin Behnam, Keynote of Chairman Rostin Behnam at the FIA Boca 2022 International Futures Industry Conference, Boca Raton, Florida (2022.03.16).

At the same time, Behnam has stressed the need for inter-agency coordination and the incomplete regulatory landscape that governs digital assets. See id. (noting he “look[s] forward to cooperating and coordinating with our fellow agencies as outlined in the Executive Order”); Testimony of Rostin Behnam, Chairman, Commodity Futures Trading Commission, Examining Digital Assets: Risks, Regulation, and Innovation, U.S. Senate Committee on Agriculture, Nutrition, and Forestry (2022.02.09) (stating that he “expect[s] there will be an increasing need to ensure a coordinated federal approach in this area, and [he] plan[s] to have the CFTC be a proactive participant in this process”).

Most recently, given what Behnam calls a "regulatory vacuum," the CFTC announced it will be reorganizing the LabCFTC as the "Office of Technology Innovation" (OTI) that will "incorporat[e] innovation and technology into [the CFTC's] regulatory oversight and mission critical functions." Chairman Rostin Behnam, Keynote Address at the Brookings Institution Webcast on The Future of Crypto Regulation (2022.07.25). The office will also offer "rotational opportunities for all CFTC employees to gain exposure and expertise" to fintech innovations, including crypto. Id. Behnam further stressed in the same speech that "we are past the incubator stage, and digital assets and decentralized financial technologies have outgrown their sandboxes." Id.

Other members of the CFTC (and Behnam’s predecessor) have echoed Chairman Behnam’s calls for both clearer regulation and robust, coordinated enforcement of DeFi markets that appear to be operating in violation of the Commodity Exchange Act:

• “[W]e should not permit DeFi to become an unregulated shadow financial market in direct competition with regulated markets. The CFTC, together with other regulators, need to focus more attention to this growing area of concern and address regulatory violations appropriately.” Dan M. Berkovitz, Keynote Address Before FIA and SIFMA-AMG, Asset Management Derivatives Forum 2021 (2021.06.08).
• “[W]e have filed more cases in parallel with the Department of Justice than ever before. . . . the CFTC filed charges against a trading platform and its CEO for unlawfully offering products margined in Bitcoin without the required anti-money laundering protections in place. We brought the civil action, and DOJ and the FBI secured an order seizing the platform’s website and shutting it down.” James McDonald, Keynote Address at the Practising Law Institute’s White Collar Crime 2019 Program (2019.09.25).
• “[C]urrent law does not provide any U.S. Federal regulator with such regulatory oversight authority over spot virtual currency platforms [absent fraud or manipulation] operating in the United States or abroad. . . . The CFTC has been in close communication with the SEC with respect to policy and jurisdictional considerations, especially in connection with recent virtual currency enforcement cases.” J. Christopher Giancarlo, Written Testimony Before the Senate Banking Committee, at 4, 11 (2018.02.06).

The CFTC has also issued multiple joint statements with the SEC regarding enforcement in the digital asset and virtual currency space. Those statements also focused on the CFTC’s ongoing efforts to combat fraud, market manipulation, and evasion of AML/CFT regulations that go hand-in-hand with such schemes:

• “Certain BSA obligations that apply to a broker-dealer in securities, mutual fund, futures commission merchant, or introducing broker, such as developing an AML Program or reporting suspicious activity, apply very broadly and without regard to whether the particular transaction at issue involves a ‘security’ or a ‘commodity’ as those terms are defined under the federal securities laws or the CEA.” CFTC, FinCEN, and SEC, Joint Statement on Activities Involving Digital Assets (2019.10.11).
• “When market participants engage in fraud under the guise of offering digital instruments – whether characterized as virtual currencies, coins, tokens, or the like – the SEC and the CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws.” CFTC, Joint Statement from CFTC and SEC Enforcement Directors Regarding Virtual Currency Enforcement Actions (2018.01.19).

Enforcement Actions

The vast majority of the CFTC’s enforcement actions have involved combating fraud or market manipulation in the cash or spot market for virtual currencies. This an interesting approach for the CFTC as these markets are not the ones it primarily covers; but it is also an approach for which it has clear statutory authority to protect retail consumers. See Chairman Rostin Behnam, Keynote of Chairman Rostin Behnam at the FIA Boca 2022 International Futures Industry Conference, Boca Raton, Florida (2022.03.16) (noting CFTC’s “limited fraud and manipulation authority in the digital asset space” that nevertheless led to 24 of 50 enforcement actions relating to digital assets).

The other areas the CFTC has enforced include failure to register, off-exchange transactions, price manipulation, and KYC/CIP/AML violations. In many cases multiple theories of liability are advanced at the same time. The various types of the CFTC’s many enforcement actions are categorized below.

Fraudulent Schemes

• CFTC, Release No. 8549-22, CFTC Charges South African Pool Operator and CEO with $1.7 Billion Fraud Involving Bitcoin (2022.06.30)
• CFTC, Release No. 8540-22, CFTC Charges Gemini Trust Company for Making Material False or Misleading Statements and Omissions to the Commission (2022.06.02)
• CFTC v. Gemini Trust Company, LLC, No. 1:22-cv-04563 (S.D.N.Y. 2022.06.02)
• CFTC, Release No. 8532-22, CFTC Charges Oregon and Illinois Residents and Florida Company in $44 Million Misappropriation in Ongoing Digital Asset and Commodity Futures Fraud (2022.05.19)
• CFTC v. Ikkurty, No. 1:22-cv-002465-DCG (N.D. Ill. 2022.05.10)
• CFTC, Release No. 8507-22, Court Finds El Paso Man and His Firm Liable for Defrauding Forex and Cryptocurrency Clients of More Than $7.2 Million (2022.03.29)
• CFTC v. Tinoco & Kikit & Mess Investments, LLC, No. 3:21-cv-00237-DCG (W.D. Tex. 2022.03.25)
• CFTC, Release No. 8460-21, Federal Court Orders Florida Man and Foreign Defendants to Pay $7 Million for Role in Fraudulent Binary Options and Digital Asset Scheme (2021.11.17)
• CFTC v. Daniel Fingergut, Itay Barak, Tal Valariola, & Digital Platinum Ltd., No. 1:20-cv-21887-DPG (S.D. Fla. 2021.11.17)
• CFTC, Release No. 8441-21, CFTC Charges Nigerian and American Citizens Operating as PrimeFX with Forex and Bitcoin Fraud and Misappropriation (2021.09.30)
• CFTC, Release No. 8411-21, Federal Court Orders Texas and Florida Men to Pay Nearly $1.75 Million in Digital Assets Scheme (2021.08.10)
• CFTC v. Mayco Alexis Maldonado Garcia d/b/a Global Trading Club, No. 4:20-cv-03185 (S.D. Tex. 2021.07.26)
• CFTC, Release No. 8381-21, CFTC Orders Florida Man and His Company to Pay Over $397,000 in Connection with a Digital Assets Solicitation Scheme (2021.04.20)
• In re J Squared Invest LLC and Jozef Gherman, CFTC Docket No. 21-06 (2021.04.19)
• CFTC, Release No. 8377-21, Federal Court Orders Nevada Company and its Owner to Pay More Than $32 Million for Cryptocurrency Fraud and Misappropriation Scheme (2021.04.08)
• CFTC v. David Gilbert Saffron and Circle Society, Corp., No. 2:19-cv-01697-JAD-DJA (D. Nev. 2021.03.29) (Final Judgment of Disgorgement, Civil Penalty, Restitution, and Permanent Injunction)
• CFTC v. David Gilbert Saffron and Circle Society, Corp., No. 2:19-cv-01697-JAD-DJA (D. Nev. 2020.06.05) (Order Granting Motion for Compensatory Fees and Expenses)
• CFTC, Release No. 8371-21, Federal Court Orders UK Man to Pay More Than $571 Million for Operating Fraudulent Bitcoin Trading Scheme (2021.03.26)
• CFTC v. Benjamin Reynolds, No. 1:19-cv-05631-MKV (S.D.N.Y. 2021.03.02)
• CFTC, Release No. 8356-21, CFTC Charges New York Man in Multi-Million Dollar Digital Asset Ponzi Scheme Involving Bitcoin and Ether (2021.01.26)
• CFTC, Release No. 8304-20, Federal Court Orders Colorado Company and its Principal to Pay Over $900,000 for Digital Asset and Forex Ponzi Scheme (2020.11.04)
• CFTC v. Venture Capital Investments Ltd and Breonna S. Clark, No. 1:20-cv-00382-DDD-MEH (D. Colo. 2020.11.02)
• CFTC, Release No. 8272-20, Federal Court Orders Pennsylvania Man Pay $7.4 Million in Restitution for Multi-Million Dollar Bitcoin Fraud (2020.10.02)
• CFTC v. Jon Barry Thompson, No. 1:19-cv-09052-LAP (S.D.N.Y. 2020.10.01)
• CFTC, Release No. 8226-20, CFTC Charges Multiple Individuals and Entities in $28 Million Ponzi Scheme that Targeted Churchgoers (2020.08.28)
• CFTC, Release No. 8148-20, CFTC Charges Florida Man and His Companies in Fraudulent Forex and Digital Asset Scheme (2020.04.16)
• CFTC, Release No. 8115-20, CFTC Charges Company and its Principal in $33 Million Fraudulent Digital Asset Scheme (2020.02.11)
• CFTC, Release No. 7839-18, CFTC Orders Former Virtual Currency Trader to Pay More than $1.1 Million for Fraudulent Bitcoin and Litecoin Scheme (2018.11.09)
• In re Joseph Kim, CFTC Docket No. 19-02 (2018.10.29)
• CFTC, Release No. 7831-18, Federal Court Orders Trading Firm and CEO to Pay More than $2.5 Million for Fraudulent Bitcoin Ponzi Scheme (2018.10.18)
• CFTC v. Gelfman Blueprint, Inc. and Nicholas Gelfman, No. 1:17-cv-07181-PKC (S.D.N.Y. 2018.10.15) (Final Judgment by Default, Permanent Injunction, Civil Monetary Penalty)
• CFTC v. Gelfman Blueprint, Inc. and Nicholas Gelfman, No. 1:17-cv-07181-PKC (S.D.N.Y. 2018.10.02) (Consent Order)
• CFTC Release No. 7820-18, Federal Court Finds that Virtual Currencies Are Commodities (2018.10.03)
• CFTC v. My Big Coin Pay, Inc., No. 1:18-cv-10077-RWZ (D. Mass. 2018.09.26)
• CFTC Release No. 7774-18, CFTC Wins Trial against Virtual Currency Fraudster (2018.08.24)
• CFTC v. Patrick K. McDonnell & Cabbagetech, Corp. d/b/a Coin Drop Markets, No. 1:18-cv-00361-JBW-RLM (E.D.N.Y. 2018.08.23) (Memorandum, Findings of Fact, Conclusions of Law, and Directions for Final Judgment and Injunction)
• CFTC v. Patrick K. McDonnell & Cabbagetech, Corp. d/b/a Coin Drop Markets, No. 1:18-cv-00361-JBW-RLM (E.D.N.Y. 2018.08.23) (Final Judgment)
• CFTC v. Patrick K. McDonnell & Cabbagetech, Corp. d/b/a Coin Drop Markets, 287 F. Supp. 3d 213, 228 (E.D.N.Y. 2018.03.06)
• CFTC Release No. 7760-18, Federal Court Orders Commodity Pool Operator and Its Principal to Pay More Than $1.9 Million for Bitcoin and Binary Options Fraud Scheme (2018.07.23)
• CFTC v. Dillon Michael Dean and The Entrepreneurs Headquarters Ltd., No. 2:18-cv-00345-SJF-AYS (2018.07.09)
• CFTC Release No. 7714-18, CFTC Charges Multiple Individuals and Companies with Operating a Fraudulent Scheme Involving Binary Options and a Virtual Currency Known as ATM Coin (2018.04.18)

Failure to Register

• CFTC, Release No. 8450-21, CFTC Orders Tether and Bitfinex to Pay Fines Totaling $42.5 Million (2021.10.15)
• In re Tether Holdings Limited, Tether Operations Limited, Tether Limited, and Tether International Limited, CFTC Docket No. 22-04 (2021.10.15) (this case is more properly charactertized as a deceptive practice, but was brought concurrently with the Bitfinex which is more clearly a failure to register issue)
• In re iFinex Inc., BFXNA Inc., and BFXWW Inc., CFTC Docket No. 22-05 (2021.10.15) (also an off-exchange transaction action)
• Dawn D. Stump, Concurring Statement Regarding Tether and Bitfinex Settlement (2021.10.15)
• CFTC, Release No. 8434-21, CFTC Charges 14 Entities for Failing to Register as FCMs or Falsely Claiming to be Registered (2021.09.29)
• In re Coinflip, Inc. d/b/a Derivabit, and Francisco Riordan, CFTC Docket No. 15-29 (2015.09.17)

Off-Exchange Transactions

• CFTC, Release No. 8433-21, CFTC Imposes A $1.25 Million Penalty against Kraken for Offering Illegal Off-Exchange Digital Asset Trading and Failing to Register as Required (2021.09.28)
• In re Payward Ventures, Inc. (d/b/a Kraken), CFTC Docket No. 21-20 (2021.09.28) (also a failure to register action)
• Dawn D. Stump, Concurring Statement Regarding Enforcement Action Against Payward Ventures, Inc. (d/b/a Kraken) (2021.09.28)
• CFTC, Release No. 8408-21, Federal Court Permanently Bans and Imposes an over $300,000 Penalty Against Foreign Trading Platform for Offering Illegal Leveraged Transactions in Ether, Litecoin, Bitcoin and Precious Metals (2021.07.09)
• CFTC v. Laino Group Ltd. d/b/a PaxForex, No. 4:20-cv-03317 (S.D. Tex. 2021.06.30)
• CFTC, Release No. 8201-20, CFTC Sanctions Two Firms Offering Digital Asset-Based Swaps for Illegal Off-Exchange Trading and Registration Violations (2020.07.13)
• In re Plutus Financial, Inc. (d/b/a Abra) and Plutus Technologies Philippines Corp. (d/b/a Abra International), CFTC Docket No. 20-23 (2020.07.13)
• Dan M. Berkovitz, Supporting Statement: In re Plutus Financial, Inc. (2020.07.13)

Price Manipulation

• CFTC, Release No. 8558-22, Federal Court Orders Texas Man to Pay Over $290,000 for Manipulative and Deceptive Digital Asset Pump-and-Dump Scheme (2022.07.18)
• CFTC, Release No. 8366-21, CFTC Charges Two Individuals with Multi-Million Dollar Digital Asset Pump-and-Dump Scheme (2021.03.05) (John McAfee and Jimmy Gale Watson)

KYC/CIP/AML Failures

• CFTC, Release No. 8412-21, Federal Court Orders BitMEX to Pay $100 Million for Illegally Operating a Cryptocurrency Trading Platform and Anti-Money Laundering Violations (2021.08.10)
• CFTC v. HDR Global Trading Ltd., 100x Holdings Ltd., ABS Global Trading Ltd., Shine Effort Inc Ltd., HDR Global Services (Bermuda) Ltd., Arthur Hayes, Benjamin Delo, & Samuel Reed d/b/a BitMEX, No. 1:20-cv-08132 (S.D.N.Y. 2021.08.10) (also an off-exchange transaction action)
• Dan M. Berkovitz, Statement on the $100 Million BitMEX Crypto Trading Fine (2021.08.10)
• CFTC Release No. 7809-18, CFTC Charges Trading Platform with Illegal Transactions Margined in Bitcoin, Failing to Implement Procedures to Prevent Money-Laundering, and Failing to Register with the CFTC (2018.09.27) (1pool Ltd. and Patrick Brunner)

Index of Sources

Sources are listed in reverse chronological order. Not all sources appear above.

• Chairman Rostin Behnam, Keynote Address at the Brookings Institution Webcast on The Future of Crypto Regulation (2022.07.25)
• CFTC, Release No. 8558-22, Federal Court Orders Texas Man to Pay Over $290,000 for Manipulative and Deceptive Digital Asset Pump-and-Dump Scheme (2022.07.18)
• CFTC, Release No. 8549-22, CFTC Charges South African Pool Operator and CEO with $1.7 Billion Fraud Involving Bitcoin (2022.06.30)
• CFTC, Release No. 8540-22, CFTC Charges Gemini Trust Company for Making Material False or Misleading Statements and Omissions to the Commission (2022.06.02)
• CFTC v. Gemini Trust Company, LLC, No. 1:22-cv-04563 (S.D.N.Y. 2022.06.02)
• CFTC, Release No. 8532-22, CFTC Charges Oregon and Illinois Residents and Florida Company in $44 Million Misappropriation in Ongoing Digital Asset and Commodity Futures Fraud (2022.05.19)
• CFTC v. Ikkurty, No. 1:22-cv-002465-DCG (N.D. Ill. 2022.05.10)
• CFTC, Release No. 8507-22, Court Finds El Paso Man and His Firm Liable for Defrauding Forex and Cryptocurrency Clients of More Than $7.2 Million (2022.03.29)
• CFTC v. Tinoco & Kikit & Mess Investments, LLC, No. 3:21-cv-00237-DCG (W.D. Tex. 2022.03.25)
• Chairman Rostin Behnam, Keynote of Chairman Rostin Behnam at the FIA Boca 2022 International Futures Industry Conference, Boca Raton, Florida (2022.03.16)
• Testimony of Rostin Behnam, Chairman, Commodity Futures Trading Commission, Examining Digital Assets: Risks, Regulation, and Innovation, U.S. Senate Committee on Agriculture, Nutrition, and Forestry (2022.02.09)
• CFTC, Release No. 8460-21, Federal Court Orders Florida Man and Foreign Defendants to Pay $7 Million for Role in Fraudulent Binary Options and Digital Asset Scheme (2021.11.17)
• CFTC v. Daniel Fingergut, Itay Barak, Tal Valariola, & Digital Platinum Ltd., No. 1:20-cv-21887-DPG (S.D. Fla. 2021.11.17)
• CFTC, Release No. 8450-21, CFTC Orders Tether and Bitfinex to Pay Fines Totaling $42.5 Million (2021.10.15)
• In re Tether Holdings Limited, Tether Operations Limited, Tether Limited, and Tether International Limited, CFTC Docket No. 22-04 (2021.10.15)
• In re iFinex Inc., BFXNA Inc., and BFXWW Inc., CFTC Docket No. 22-05 (2021.10.15)
• Dawn D. Stump, Concurring Statement Regarding Tether and Bitfinex Settlement (2021.10.15)
• CFTC, Release No. 8441-21, CFTC Charges Nigerian and American Citizens Operating as PrimeFX with Forex and Bitcoin Fraud and Misappropriation (2021.09.30)
• CFTC, Release No. 8434-21, CFTC Charges 14 Entities for Failing to Register as FCMs or Falsely Claiming to be Registered (2021.09.29)
• CFTC, Release No. 8433-21, CFTC Imposes A $1.25 Million Penalty against Kraken for Offering Illegal Off-Exchange Digital Asset Trading and Failing to Register as Required (2021.09.28)
• In re Payward Ventures, Inc. (d/b/a Kraken), CFTC Docket No. 21-20 (2021.09.28)
• Dawn D. Stump, Concurring Statement Regarding Enforcement Action Against Payward Ventures, Inc. (d/b/a Kraken) (2021.09.28)
• CFTC, Release No. 8411-21, Federal Court Orders Texas and Florida Men to Pay Nearly $1.75 Million in Digital Assets Scheme (2021.08.10)
• CFTC v. Mayco Alexis Maldonado Garcia d/b/a Global Trading Club, No. 4:20-cv-03185 (S.D. Tex. 2021.07.26)
• CFTC, Release No. 8412-21, Federal Court Orders BitMEX to Pay $100 Million for Illegally Operating a Cryptocurrency Trading Platform and Anti-Money Laundering Violations (2021.08.10)
• CFTC v. HDR Global Trading Ltd., 100x Holdings Ltd., ABS Global Trading Ltd., Shine Effort Inc Ltd., HDR Global Services (Bermuda) Ltd., Arthur Hayes, Benjamin Delo, & Samuel Reed d/b/a BitMEX, No. 1:20-cv-08132 (S.D.N.Y. 2021.08.10)
• Dan M. Berkovitz, Statement on the $100 Million BitMEX Crypto Trading Fine (2021.08.10)
• CFTC, Release No. 8408-21, Federal Court Permanently Bans and Imposes an over $300,000 Penalty Against Foreign Trading Platform for Offering Illegal Leveraged Transactions in Ether, Litecoin, Bitcoin and Precious Metals (2021.07.09)
• CFTC v. Laino Group Ltd. d/b/a PaxForex, No. 4:20-cv-03317 (S.D. Tex. 2021.06.30)
• Dan M. Berkovitz, Keynote Address Before FIA and SIFMA-AMG, Asset Management Derivatives Forum 2021 (2021.06.08)
• CFTC, Release No. 8381-21, CFTC Orders Florida Man and His Company to Pay Over $397,000 in Connection with a Digital Assets Solicitation Scheme (2021.04.20)
• In re J Squared Invest LLC and Jozef Gherman, CFTC Docket No. 21-06 (2021.04.19)
• CFTC, Release No. 8377-21, Federal Court Orders Nevada Company and its Owner to Pay More Than $32 Million for Cryptocurrency Fraud and Misappropriation Scheme (2021.04.08)
• CFTC v. David Gilbert Saffron and Circle Society, Corp., No. 2:19-cv-01697-JAD-DJA (D. Nev. 2021.03.29) (Final Judgment of Disgorgement, Civil Penalty, Restitution, and Permanent Injunction)
• CFTC v. David Gilbert Saffron and Circle Society, Corp., No. 2:19-cv-01697-JAD-DJA (D. Nev. 2020.06.05) (Order Granting Motion for Compensatory Fees and Expenses)
• CFTC, Release No. 8371-21, Federal Court Orders UK Man to Pay More Than $571 Million for Operating Fraudulent Bitcoin Trading Scheme (2021.03.26)
• CFTC v. Benjamin Reynolds, No. 1:19-cv-05631-MKV (S.D.N.Y. 2021.03.02)
• CFTC, Release No. 8366-21, CFTC Charges Two Individuals with Multi-Million Dollar Digital Asset Pump-and-Dump Scheme (2021.03.05) (John McAfee and Jimmy Gale Watson)
• Dawn D. Stump, Opening Statement Before the Market Risk Advisory Committee (2021.02.23)
• CFTC, Release No. 8356-21, CFTC Charges New York Man in Multi-Million Dollar Digital Asset Ponzi Scheme Involving Bitcoin and Ether (2021.01.26)
• CFTC, The CFTC’s Role in Monitoring Virtual Currencies, at 2 (2020)
• CFTC, Release No. 8304-20, Federal Court Orders Colorado Company and its Principal to Pay Over $900,000 for Digital Asset and Forex Ponzi Scheme (2020.11.04)
• CFTC v. Venture Capital Investments Ltd and Breonna S. Clark, No. 1:20-cv-00382-DDD-MEH (D. Colo. 2020.11.02)
• CFTC, Division of Swap Dealer and Intermediary Oversight, Accepting Virtual Currencies from Customers into Segregation (2020.10.21)
• CFTC, Release No. 8272-20, Federal Court Orders Pennsylvania Man Pay $7.4 Million in Restitution for Multi-Million Dollar Bitcoin Fraud (2020.10.02)
• CFTC v. Jon Barry Thompson, No. 1:19-cv-09052-LAP (S.D.N.Y. 2020.10.01)
• CFTC, Release No. 8201-20, CFTC Sanctions Two Firms Offering Digital Asset-Based Swaps for Illegal Off-Exchange Trading and Registration Violations (2020.07.13)
• In re Plutus Financial, Inc. (d/b/a Abra) and Plutus Technologies Philippines Corp. (d/b/a Abra International), CFTC Docket No. 20-23 (2020.07.13)
• Dan M. Berkovitz, Supporting Statement: In re Plutus Financial, Inc. (2020.07.13)
• CFTC, Final Interpretive Guidance, Retail Commodity Transactions Involving Certain Digital Assets, 85 Fed. Reg. 37734 (2020.06.24)
• CFTC, Release No. 8139-20, CFTC Issues Final Interpretive Guidance on Actual Delivery for Digital Assets (2020.03.24)
• CFTC, Release No. 8148-20, CFTC Charges Florida Man and His Companies in Fraudulent Forex and Digital Asset Scheme (2020.04.16)
• Brian D. Quintenz, Opening Statement Before the CFTC Technology Advisory Committee (2020.02.26)
• CFTC, Release No. 8115-20, CFTC Charges Company and its Principal in $33 Million Fraudulent Digital Asset Scheme (2020.02.11)
• CFTC, FinCEN, and SEC, Joint Statement on Activities Involving Digital Assets (2019.10.11)
• James McDonald, Keynote Address at the Practising Law Institute’s White Collar Crime 2019 Program (2019.09.25)
• CFTC, Request for Input, Request for Input on Crypto-Asset Mechanics and Markets, 83 Fed. Reg. 64563 (2018.12.17)
• CFTC, Release No. 7839-18, CFTC Orders Former Virtual Currency Trader to Pay More than $1.1 Million for Fraudulent Bitcoin and Litecoin Scheme (2018.11.09)
• In re Joseph Kim, CFTC Docket No. 19-02 (2018.10.29)
• CFTC, Release No. 7831-18, Federal Court Orders Trading Firm and CEO to Pay More than $2.5 Million for Fraudulent Bitcoin Ponzi Scheme (2018.10.18)
• CFTC v. Gelfman Blueprint, Inc. and Nicholas Gelfman, No. 1:17-cv-07181-PKC (S.D.N.Y. 2018.10.15) (Final Judgment by Default, Permanent Injunction, Civil Monetary Penalty)
• CFTC v. Gelfman Blueprint, Inc. and Nicholas Gelfman, No. 1:17-cv-07181-PKC (S.D.N.Y. 2018.10.02) (Consent Order)
• CFTC Release No. 7820-18, Federal Court Finds that Virtual Currencies Are Commodities (2018.10.03)
• CFTC v. My Big Coin Pay, Inc., 334 F. Supp. 3d 492, 495–98 (D. Mass. 2018.09.26)
• CFTC Release No. 7809-18, CFTC Charges Trading Platform with Illegal Transactions Margined in Bitcoin, Failing to Implement Procedures to Prevent Money-Laundering, and Failing to Register with the CFTC (2018.09.27) (1pool Ltd. and Patrick Brunner)
• CFTC Release No. 7774-18, CFTC Wins Trial against Virtual Currency Fraudster (2018.08.24)
• CFTC v. Patrick K. McDonnell & Cabbagetech, Corp. d/b/a Coin Drop Markets, No. 1:18-cv-00361-JBW-RLM (E.D.N.Y. 2018.08.23) (Memorandum, Findings of Fact, Conclusions of Law, and Directions for Final Judgment and Injunction)
• CFTC v. Patrick K. McDonnell & Cabbagetech, Corp. d/b/a Coin Drop Markets, No. 1:18-cv-00361-JBW-RLM (E.D.N.Y. 2018.08.23) (Final Judgment)
• CFTC Release No. 7760-18, Federal Court Orders Commodity Pool Operator and Its Principal to Pay More Than $1.9 Million for Bitcoin and Binary Options Fraud Scheme (2018.07.23)
• CFTC v. Dillon Michael Dean and The Entrepreneurs Headquarters Ltd., No. 2:18-cv-00345-SJF-AYS (2018.07.09)
• CFTC, Staff Advisory No. 18-14, Advisory with Respect to Virtual Currency Derivative Product Listings (2018.05.21)
• CFTC Release No. 7714-18, CFTC Charges Multiple Individuals and Companies with Operating a Fraudulent Scheme Involving Binary Options and a Virtual Currency Known as ATM Coin (2018.04.18)
• CFTC v. Patrick K. McDonnell & Cabbagetech, Corp. d/b/a Coin Drop Markets, 287 F. Supp. 3d 213, 228 (E.D.N.Y. 2018.03.06)
• CFTC, Customer Advisory: Beware Virtual Currency Pump-and-Dump Schemes (2018.02.15)
• J. Christopher Giancarlo, Written Testimony Before the Senate Banking Committee (2018.02.06)
• CFTC, Joint Statement from CFTC and SEC Enforcement Directors Regarding Virtual Currency Enforcement Actions (2018.01.19)
• CFTC, Office of Public Affairs, CFTC Backgrounder on Oversight of and Approach to Virtual Currency Futures Markets (2018.01.04)
• CFTC, Retail Commodity Transactions Involving Virtual Currency, 82 Fed. Reg. 60335 (2017.12.20) (proposed interpretation; request for comment)
• CFTC, Customer Advisory: Understand the Risks of Virtual Currency Trading (2017.12.15)
• CFTC, Office of Public Affairs, CFTC Backgrounder on Self-Certified Contracts for Bitcoin Products (2017.12.01)
• CFTC, A CFTC Primer on Virtual Currencies (2017.10.17)
• In re Coinflip, Inc. d/b/a Derivabit, and Francisco Riordan, CFTC Docket No. 15-29 (2015.09.17)
• Timothy Massad, Testimony Before the U.S. Senate Committee on Agriculture, Nutrition & Forestry (2014.12.10)

Authors

This article was drafted by @Lawtoshi.