CFTC States 50% of Reported Cases Involved Crypto in Released Enforcement Results

The US premier enforcement agency, Commodity Futures Trading Commission (CFTC), has announced the release of its record-setting enforcement results for the fiscal year (FY) of 2023.

As detailed in an official document dated November 7, the government agency reported its pursuit of 96 enforcement actions through its Division of Enforcement (DOE).

These actions primarily targeted cases related to fraud, derivative market manipulation, and other significant violations across various markets, including cryptocurrency assets and swap markets.

From these 96 enforcement actions, the CFTC successfully secured over $4.3 billion in combined legal penalties, disgorgement, and restitution.

Notably, 47 of these cases were focused on the digital asset sector. This phenomenal figure represents more than 49% of the total lawsuits completed in the fiscal year, making it a historic best in legal actions taken by the CFTC in the emerging industry.

@CFTC released its FY 2023 record-setting #enforcement results. Learn more: https://t.co/J8iBX4kWtG

— CFTC (@CFTC) November 7, 2023

Zooming in on its significant legal actions, the CFTC stated that it sued embattled FTX and Alameda Research executives like Sam Bankman-Fried, Nashad Singh, and Caroline Elisson.

These actions were taken in response to alleged fraudulent schemes involving digital asset commodity trading that led to the loss of $8 billion for a large portion of its customers, including US citizens.

Following this, the Binance exchange and its key executives were hit with lawsuits for operating an illegal digital asset derivative exchange.

Additionally, the CFTC charged the now-defunct decentralized lending platform Celsius Network and its CEO, Alex Mashinsky, with fraud and material misrepresentations related to a commodity pool scheme involving cryptocurrencies.

Further enforcement successes include securing a default judgment order against the Ooki decentralized autonomous organization (DAO) for operating an unlawful trading platform and acting as a futures commission merchant (FCM) without proper legal authorization.

Rounding up its stockpile of enforcement sweep in the crypto space, the CFTC noted that it charged 14 separate entities falsely claiming to be registered with the agency while offering their customers foreign exchange (Forex) and digital asset trading platforms.

Agency Working Hand-in-Hand With Whistleblowers

Commenting on this year’s remarkable success, Director of Enforcement Ian McGinley emphasized the agency’s unwavering dedication to promoting accountability and safeguarding customers in emerging and less regulated markets.

However, the CFTC has not acted in isolation when pursuing this record number of cases against wrongdoers in the cryptocurrency sector.

According to a press statement released by CFTC Commissioner Christy Goldsmith Romero, the agency has partnered with whistleblowers to bring the needed enforcement actions.

Very proud of these offices and their outsized results. As a former IG, I know firsthand how important whistleblowers
are. The CFTC could not fully protect customers and markets w/o them. Click to read about the highest # of tips, crypto tips & environmental fraud tips. https://t.co/C4I9tgnxRU

— Commissioner Christy Goldsmith Romero (@CFTCcgr) October 31, 2023

Providing much-needed data, Romero stated that the government agency has paid out $350 million to whistleblowers involved in its special program.

Statement of @CFTCcgr in Support of the CFTC’s 2023 Annual Report on the Whistleblower Program and Customer Education Initiatives: https://t.co/imG9Lhu20x

— CFTC (@CFTC) October 31, 2023

So far this year, it has paid out $16 million to whistleblowers, with two individuals pocketing $15 million for supplying valuable information related to cryptocurrency-related scams.