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Digitex Founder Pleads Guilty to Failure in Anti-Money Laundering Program Implementation

Hassan Shittu
Last updated: | 2 min read
Digitex Founder Pleads Guilty to Failure in Anti-Money Laundering Program Implementation

In an announcement on Tuesday, the U.S. Attorney’s Office for the Southern District of Florida said Todd pleaded guilty to “willfully causing” Digitex to violate the Bank Secrecy Act. Notably, authorities indicted the former CEO in February.

Former Digitex CEO Adam Todd Pleads Guilty to Violating Bank Secrecy Act

According to the indictment, Todd played an active role in operating an unregulated futures trading platform servicing U.S. customers from 2018 to 2022, failing to implement and maintain AML and Know Your Customer (KYC) programs. Todd is also claimed to have publicly refused to implement KYC policies for Digitex Futures.

In 2020, after a considerable data leakage at Digitex that uncovered confidential user data, Todd declared the discontinuation of all KYC checks. Willingly, Todd made this choice despite the platform’s earlier assertions that U.S. IPs were blocked and that users would have to confirm that they were not located in the United States.

Notably, according to the U.S. Attorney’s Office, Todd’s guilty plea could result in a potential sentence of up to five years in prison and a fine of $250,000. The sentencing will be determined by a federal district court judge, who will consider the U.S. Sentencing Guidelines and other pertinent factors.

Former Binance CEO Changpeng Zhao faced similar charges in a different federal district and pleaded guilty in November 2023, receiving a four-month prison sentence in April.

While there is no confirmed date for Todd’s sentencing hearing, his LinkedIn profile indicates that he stepped down as CEO of Digitex Futures Exchange in October 2022.

Adam Todd Faces Legal Actions, Including Default Judgment by CFTC

Todd’s indictment follows a series of legal actions against him, including a default judgment issued by the Commodities Futures Trading Commission (CFTC) seven months prior.

In July 2023, Judge Roy Altman of the U.S. District Court for the Southern District of Florida granted a permanent injunction against Todd and four companies under his control, including Digitex Futures Exchange. This injunction stemmed from allegations that Todd attempted to manipulate the price of the platform’s native token, DGTX, using a computerized bot.

The charges against Todd and his companies included illegally offering futures transactions on a platform not designated as a contract market, failure to register with the CFTC, and neglecting to implement customer information programs, Know Your Customer (KYC) procedures, and Anti-Money Laundering (AML) procedures.

The court’s order prohibited Todd and his firms from registering with the CFTC and trading in any CFTC-regulated markets. Additionally, the court ordered Todd to pay a $3.9 million disgorgement and a $11.7 million civil monetary penalty, effectively resolving the CFTC’s enforcement action against the entities.