Archive

October 21, 2021

The CFTC has issued a final award of nearly $200 million to a whistleblower whose information significantly contributed to government investigations resulting in successful enforcement actions by the CFTC, another U.S. federal regulator, and a foreign regulator.  In making the award, the CFTC noted that the information provided by the whistleblower was specific and credible, leading to important, direct evidence of wrongdoing, as well as voluntarily provided and timely, even though the CFTC already had an open investigation at the time of the whistleblower’s report.  The CFTC had first issued a preliminary order denying the individual’s application; the whistleblower requested reconsideration and provided information about how his information was utilized, including in the parallel investigations.  CFTC

October 15, 2021

iFinex Inc. and related entities doing business as cryptocurrency trading platform Bitfinex, agreed to pay $1.5 million to resolve charges that they operated as an unregistered futures commission merchant (FCM) and engaged in illegal, off-exchange retail commodity transactions in digital assets with U.S. persons that were not eligible contract participants (ECPs).  The CFTC found that Bitfinex allowed margin trading financed through a peer-to-peer funding program through which Bitfinex customers who held fiat or cryptocurrency in their Bitfinex account would “lend” those funds to other Bitfinex customers who would then use those funds to buy, sell, and trade on the Bitfinex platform, in violation of a 2016 CFTC order.  CFTC

October 15, 2021

Tether Holdings Limited and related entities, issuers of the “Tether Token” or USDt, have agreed to pay a civil monetary penalty of $41 million to resolve allegations that they violated the CEA and CFTC regulations by making untrue or misleading statements and/or omitting material facts through statements that Tether maintained sufficient U.S. dollar and other fiat currency reserves in bank accounts to back every USDt in circulation.  In fact, Tether did not hold sufficient currency reserves at all times.  The reserves were inadequate in amount, and were not held in currency in bank accounts, but instead included unsecured receivables and non-fiat assets, which were held by unregulated entities and third-parties including Bitfinex, which commingled reserve funds with operational and customer funds.  The CFTC also found that Tether failed to perform routine professional audits as represented.  CFTC

September 29, 2021

Société Générale S.A. has been ordered to pay a $1.5 million civil monetary penalty for its failure to comply with certain swap dealer requirements, reporting inaccurate swap valuation data, and other failures.  The alleged failures occurred between 2013 and 2021 and involved failing to disclose pre-trade or mid-market marks, failing to accurately report certain swap valuation data, and failing to maintain adequate supervision over mid-market mark disclosures.  CFTC

September 28, 2021

Payward Ventures, Inc., d/b/a Kraken has been ordered to pay a $1.25 million civil monetary penalty for violating the Commodity Exchange Act.  According to the CFTC, for a year ending in July 2021, Kraken illegally offered commodity transactions in retail assets, despite failing to register as a futures commission merchant.  CFTC

September 28, 2021

Interactive Brokers LLC has been ordered to pay $1.75 million in civil monetary penalty and $82.57 million in restitution for violating CFTC Regulation 166.3 in failing to supervise the handling of customer accounts.  According to the CFTC, Interactive Brokers was aware of the possibility of negative oil futures prices but failed to prepare and configure its electronic trading system to display those prices or allow customers to place buy and sell orders with negative-priced limits.  Subsequently, customers suffered losses in excess of $82.57 million.  CFTC

September 15, 2021

Ronald Montano and his company, Montano Enterprises LLC, have been ordered to pay $2.5 million in restitution and civil monetary penalty for using fraudulent solicitations in connection with binary options with commodity interests.  The solicitations misrepresented automated trading systems as successful, using fictitious trading results, fabricated customer testimonials, and falsified background information on the systems’ creators.  CFTC

August 25, 2021

Default judgment was entered against Silver Star FX, LLC d/b/a Silver Star Live, Silver Star Live Software LLC, and David Wayne Mayer based on findings that, acting as unregistered commodity trading advisors, they fraudulently solicited customers to open discretionary foreign exchange trading accounts that would purportedly use an automated trading software developed by Mayer.  Defendants misrepresented Mayer's qualifications and trading experience, as well as the trading system's performance history and expected profits.  Defendants were ordered to pay $3.9 million in restitution and $11.7 million in civil monetary penalties.  CFTC

August 23, 2021

Charles McAllister was ordered to pay $16.2 million in restitution to resolve claims arising from his operation of BullionDirect, Inc., which promised customers that it would purchase precious metals on their behalf, and deliver or store that metal. In fact, however, McCallister and BullionDirect did not purchase or store metal for customers, but instead misappropriated customer funds to pay back other customers, cover business expenses, and invest in other businesses.  Defendants sent false account statements to customers to conceal the fraud.  In 2019, McAllister was sentenced to 10 years in prison.  CFTC

August 13, 2021

Tyson Foods, Inc. will pay $1.5 million to resolve allegations that on nearly 600 dates between 2016 and 2021 the company held positions in Chicago Board of Trade soybean meal futures in excess of then-applicable federal position limits, and filed incorrect Statements of Cash Positions in Grain (Form 204) with the CFTC.  CFTC