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CFTC Enforcement Actions

The Commodity Futures Trading Commission (CFTC) is the United States agency with primary responsibility for enforcing the Commodity Exchange Act (CEA) and regulating commodity futures and related markets. Whistleblowers with knowledge of violations of laws and regulations enforced by the CFTC can submit a claim under the CFTC Whistleblower Reward Program, and may be eligible to receive a monetary reward and protection against retaliation by employers.

Below are summaries of recent CFTC settlements or successful enforcement actions. If you believe you have information about fraud which could give rise to a CFTC enforcement action and claim under the CFTC Whistleblower Reward Program, please contact us to speak with one of our experienced whistleblower attorneys.

June 25, 2021

Three Credit Suisse entities—Credit Suisse International, Credit Suisse Securities Europe Limited, and Credit Suisse Capital LLC—have been ordered to pay a $1.5 million civil monetary penalty to resolve charges of failing to comply with swap data reporting obligations between 2013 and 2018.  Specifically, the entities reported the mark-to market notational value of underlying equity rather than the daily mark of certain equity swap transactions.  The failure resulted in errors in the majority of the reportable equity swap transactions submitted to the swap dealer repository.  CFTC

June 3, 2021

The CFTC obtained a default judgment against Florida resident James Frederick Walsh, who was ordered to pay a penalty of more than $500,000.  Walsh, who was not registered with the CFTC, marketed himself through social media as an experienced foreign exchange trader who could conduct retail forex trades for customers.  Walsh advertised that the COVID-19 pandemic created an opportunity for increased forex trading profits,  guaranteed returns, and claimed to have inside information about forex markets.   CFTC

April 27, 2021

The owner of BMC Worldwide, Inc., which did business as Blue Moon Coins, Aaron Michael Scott, has agreed to an order for restitution of $1.4 million to customers who sent him funds for the purpose of purchasing gold and silver based on his false representations that he and BMC were a successful precious metals firm with an inventory of precious metals.  In fact, the defendants had no such inventory, and misappropriated customer funds for their own purposes.  Scott previously pleaded guilty to wire fraud and was sentenced to four years in prison.  CFTC

April 9, 2021

The Alista Group, LLC, and Luis M. Pineda Palacios, a/k/a Luis Pineda, have been ordered to pay civil monetary penalties and restitution in an action initiated by the CFTC alleging that they engaged in precious metals fraud and illegal, off-exchange precious metals sales to retail customers.  In addition, the government alleged that defendants misappropriated customer funds to trade on their own account, pay business expenses, and make payments to customers to sought to cash out.  Alista was ordered to pay a total of $2.2 million, and Pineda was ordered to pay $448,000. CFTC

April 8, 2021

Circle Society, Corp. and its owner, David Gilbert Saffron, have been ordered to pay more than $32 million in restitution, disgorgement, and civil monetary penalty for cryptocurrency fraud and misappropriation.  First as an individual, and then through Circle Society, Saffron allegedly solicited millions in Bitcoin and U.S. dollars from at least 179 individuals by making false statements regarding his trading expertise and guaranteed rates of return.  However, rather than trading the fu­nds on foreign currencies and cryptocurrency pairs, Saffron directed­­ portions to his personal cryptocurrency wallet and used other portions to pay prior investors.  CFTC

April 8, 2021

A man in New Mexico has been ordered to pay over $10.3 million in monetary sanctions and relief after he admitted to running a Ponzi scheme that spanned nearly twenty years.  Instead of investing client funds in U.S. Treasury Bond futures, Douglas Lien misappropriated over $14.2 million from 45 clients, while charging them over $3.5 million in so-called management fees.  Lien has now been permanently banned from commodities trading and registering as a futures commission merchant.  CFTC

April 7, 2021

A default judgment was ordered against Negus Capital Inc. and its principal Aaron Butler, based on charges of commodity pool fraud in connection with binary options trading.  The order finds that defendants unlawfully solicited  the public to trade binary options contracts on the North American Derivatives Exchange, defrauded 70 customers who sent in nearly $300,000, misappropriated customer funds, and operated as an unregistered commodity pool operator. In addition to restitution, defendants were ordered to pay civil penalties of nearly $900,000.  CFTC

March 26, 2021

British citizen Benjamin Reynolds, who did business as Control-Finance Limited, has been ordered to pay a total of $571 million – $143 million in restitution and $429 million as a civil penalty – by default judgment in an enforcement action brought by the CFTC.  Reynolds solicited customers on the internet and by e-mail, falsely representing that Control-Finance would engage in virtual currency trades on their behalf, with a guaranteed profit.  Reynolds also created an affiliate marketing network, falsely claiming that he would pay referral bonuses to customers.  In fact, Reynolds made no trades on customers’ behalf, earned no trading profits for them, and paid no referral rewards or bonuses. Over the course of six months in 2017, Reynolds secured at least 22,191 bitcoin, worth $143 million at the time, from more than 1,000 customers worldwide, including at least 169 residing in the U.S.  CFTC
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