Over the past two years, several exchanges and broker-dealers have misrepresented their legal status to claim new victims. Beyond the harm caused to gullible investors, these unlicensed digital asset traders—are also smirching the name of otherwise flourishing Web3 industry.
As the number of predatory crypto firms continues to grow, government agencies around the globe are tightening their noose around the once-freewheeling crypto industry.
In the latest clamp down on deceptive practices by crypto companies, the Commodity Futures Trading Commission (CFTC) has charged eight Florida-based firms for misleading customers and prospective clients about having obtained CFTC registration.
According to a press release by the CFTC, the firms that have come under its scanner include altux-fx-miner, AstroFXMinners, Avadigital-Miners.com, Globalbitasset, Gold Life Investment, Matchlessfxminer, PrimeCapitalTrade, and Trading-Extramining.
The top U.S. commodities watchdog alleges these companies falsely claimed that they were either retail foreign exchange dealers or futures commission merchants registered with the CFTC. They traded a range of products, such as digital assets, options, futures and forex.
Not only did they falsely claim CFTC registration but also claimed membership in the National Futures Association under a common identification number. As per the CFTC’s complaint, all these firms were running afoul of the Commodity Exchange Act. Now, the commodities regulator has asked for an order requiring these firms to stop straying from the law.
The action is the latest in the CFTC’s crackdown on the crypto companies, which have proliferated since 2020 when cryptocurrencies underwent renaissance, sending prices of Bitcoin and other virtual currencies soaring.
In April, the top U.S. commodities watchdog filed a lawsuit against South Africa-based bitcoin pool operator Mirror Trading International (MTI)—for orchestrating the “largest ever fraud scheme case involving Bitcoin.” In early September, a federal judge ordered MTI to pay a whopping $1.7 billion in restitution to victims.
Earlier this month, the CFTC slapped a $2 million fine on one Jacob Orvidas—claiming he was running a fraudulent Bitcoin trading pool.
Decentralized finance (DeFi) platforms — which have gained traction in recent years — haven’t been able to escape the agency’s attention either. In early September, the CFTC imposed hefty penalties on a procession of DeFi companies — including Opyn, ZeroEx and Deridex — for alleged illegal derivatives trading.
