The Commodities Futures Trading Commission has sued Adam Todd, the founder of crypto derivatives exchange Digitex, for allegedly running an illegal trading platform.
The CFTC says Digitex has “never been registered with the Commission in any capacity.” The regulator also said in its complaint, filed Friday in the Southern District of Florida, that the company lacked appropriate know-your-customer (KYC) procedures and a customer information program (CIP), both of which are meant to prevent money laundering.
The commission also alleges that Todd, who lives in Miami, tried to manipulate the price of the exchange’s native token, DGTX, by pumping it on third-party platforms.
A couple hours after the lawsuit was filed, DGTX fell 12% and was trading at zero, according to CoinGecko. At its all-time high, DGTX traded at $0.16 in October 2018. The token’s market capitalization reached an all-time high of $116,803,772 in April 2019.
According to CoinGecko, DGTX was trading on DeFi crypto exchange Uniswap and crypto trading CoinDCX, an India-based crypto trading platform.
Just last week, the CFTC settled charges against the founders of bZerox and the bZx protocol for $250,000 after claiming they had “illegally offered leveraged and margined retail commodity transactions in digital assets.” The CFTC also leveled the same charges against Ooki DAO, which took over control of the bZx protocol in August 2021.
Meanwhile, CFTC Chairman Rostin Behnam has been vocal about his belief that Bitcoin would benefit from commission regulation.
He said on Thursday that Bitcoin could “double in price” if it were traded in a CFTC-regulated market, reasoning that a lot of institutional investors have kept the asset out of their portfolios because of the lack of a regulatory framework.
Behnam also said that the majority of its enforcement actions have happened at the urging of the crypto community, originating from whistleblowers, customer complaints, and tips.
Stay on top of crypto news, get daily updates in your inbox.A couple hours after the lawsuit was filed, DGTX fell 12% and was trading at zero, according to CoinGecko. At its all-time high, DGTX traded at $0.16 in October 2018. The token’s market capitalization reached an all-time high of $116,803,772 in April 2019.