CFTC
Terrible crypto trader gets 42 months for fraud, claiming he was a total gun
A crypto trader who defrauded over 170 people was sentenced to 42 months in prison on May 11 for operating a series of cryptocurrency funds claiming to make big returns but in reality were losing money and instead operated as a Ponzi scheme. The DOJ said that 25 year old Jeremy Spence had solicited millions through false representations, “including that Spence’s crypto trading had been extremely profitable when, in fact, Spence’s trading had been consistently unprofitable.” Spence, who operated the social media channels for a crypto investment scheme called “Coin Signals” was handed the decision by United Stated District Judge Lewis Kaplan for the U.S. District Court for the Southern District of New York. Spence was also sentenced to three years of supervised release and ordered to p...
Chairmen from the SEC and CFTC talk crypto regulation at ISDA meeting
The annual meeting of the International Swaps and Derivatives Association (ISDA) began Wednesday in Madrid. United States Securities and Exchange Commission (SEC) chairman Gary Gensler and U.S. Commodity Futures Trading Commission (CFTC) chairman Rostin Behnam were both featured as keynote speakers at the event, with Behnam speaking at the morning session, and Gensler in the afternoon. Behnam spoke at length about “a request for an amended order of registration as a derivatives clearing organization (DCO) by an entity seeking to offer non-intermediated clearing of margined products to retail participants,” which was transparently a reference to FTX US’s request. “As other registered entities have expressed interest in exploring similar models, and given the potential impact on clear...
CFTC commissioner appoints crypto-experienced CME Group director as chief counsel
Kristin Johnson, one of five commissioners currently serving at the United States Commodity Futures Trading Commission, or CFTC, has announced that a CME Group executive director with experience in crypto will be joining her staff. In a Thursday announcement, Johnson said Bruce Fekrat will be her chief counsel at the CFTC starting on June 1. Fekrat worked as an executive director and associate general counsel at the CME Group for more than eight years, where he was lead regulatory counsel for issues including digital assets. During his time at the derivatives marketplace, he regulated cryptocurrency reference rates and helped in the development of financial products including Bitcoin (BTC) and Ether (ETH) derivatives. Nominated by U.S. President Joe Biden in September 2021, Johnson was swo...
New crypto litigation tracker highlights 300 cases from SafeMoon to Pepe the Frog
A new crypto litigation tracker from commercial law firm Morrison Cohen LLP shows details of more than 300 active and settled court cases since 2013. Morrison Cohen is a New York-based firm that caters to large financial institutions, entrepreneurs and early-growth stage companies, and specializes in capital markets, business litigation, real estate and bankruptcy to name a few. The company also has a cryptocurrency litigation team. The Morrison Cohen Cryptocurrency Litigation Tracker was published on May. 3, and contains any case development related to the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), the Department of Justice (DOJ) and class action/private litigation. The firm stated that it will regularly update the tracker “ to include the ...
Bipartisan bill to give CFTC authority over exchanges and stablecoins
A bipartisan group of lawmakers in D.C. introduced an updated bill on April 28 to regulate cryptocurrency developers, dealers, exchanges, and stablecoin providers, bringing them under the regulatory control of the United States Commodity Futures Trading Commission (CFTC). The Digital Commodity Exchange Act of 2022 (DCEA) was re-introduced to Congress by Republican Representatives Glenn Thompson and Tom Emmer with support from Democrat co-sponsors Darren Soto and Ro Khanna. The updated version includes a section covering stablecoin providers, who can register as a “fixed-value digital commodity operator.” These operators would be obligated to share how the stablecoin operates, retaining records for the regulator along with providing information on the assets backing the “fixed-value digital...
Self-Regulatory Organizations Growing Alongside New U.S. Crypto Regulation
As the adoption of crypto takes off, the industry is exerting increasing influence on American society. This can be seen in its lobbying efforts and political action committees, for example, and in its own organizational efforts, such as business associations that promote it at the state, regional and national levels. Another way crypto is influencing society is through self-regulation. The broader impact of self-regulation may be less apparent than when a PAC finances a political campaign or a startup is nurtured in a crypto industry-sponsored accelerator, and that limited visibility probably reflects the extent of self-regulatory organizations’ (SROs) influence at present. But SROs are helping shape the crypto industry itself, and they may eventually have a role in the crypto regul...
CTFC looks at expanded authority to regulate crypto, for less than a 10% budget increase
The U.S. Commodity Futures Trading Commission, or CFTC, has released its Fiscal Year 2023 (FY2023) budget request, seeking $365 million. This marks a 9.9% increase over the previous year and 20% over FY2021. The commission regulates the country’s derivatives market and has been increasingly active in recent years in policing financial products that incorporate cryptocurrencies. According to the agency’s request document, the CTFC focuses on digital asset custodian risk, ensuring secure storage, as well as on accounting. The agency has its own staff of certified public accountants due to the lack of guidance on digital asset accounting from sectoral oversight bodies. In addition, the agency ensures derivative clearing organizations “employ strong segregation of duty processes and proc...
U.S. Congressman calls for ‘Broad, bipartisan consensus’ on important issues of digital asset policy
In a letter to the leadership of the United States House Financial Services Committee, ranking member Patrick McHenry took a jab at “inconsistent treatment and jurisdictional uncertainty” inherent in U.S. crypto regulation and called for the Committee to take on its critical issues. McHenry, a Republican representing North Carolina, opened by mentioning that the Committee’s Democrat Chairwoman Maxine Waters is looking to schedule additional hearings addressing matters pertinent to the digital asset industry. He further stressed the need for identifying and prioritizing the key issues and achieving a “broad, bipartisan consensus” on the matters affecting the industry that holds immense promise for the financial system and broader economy. Citing the confusion that the industry faces due to ...
Former CFTC chair Giancarlo joins CoinFund as an adviser
Blockchain investment firm CoinFund has appointed former United States commodities regulator J. Christopher Giancarlo as a strategic adviser — a move that should help the Brooklyn-based company navigate the complex, ever-changing regulatory requirements in its home country. Often referred to as “Crypto Dad” by the blockchain community for his support of digital assets, Giancarlo was nominated as commissioner of the Commodity Futures Trading Commission (CFTC) in 2014. In January 2017, he became the agency’s acting chair before assuming the role full-time in August of the same year. He held the position until July 2019. CoinFund president Christopher Perkins described Giancarlo as a “driving force” of innovation at the CFTC, especially for advocating “thoughtful crypto policy in the Un...
President Biden sends CFTC nominations to Senate
The White House has officially submitted President Joe Biden’s nominations to fill two seats at the Commodity Futures Trading Commission with the upcoming departure of another commissioner. In a Friday announcement, the White House said it had sent Citi managing director Caroline Pham’s and Summer Mersinger’s names to the Senate for confirmation. Mersinger previously served as chief of staff to commissioner Dawn Stump — who is expected to leave the agency this year — as well as the director of the Office of Legislative and Intergovernmental Affairs. She and Pham will be taking the places of recently departed commissioner Dan Berkovitz, whose term expires in April 2023, and that of Stump, with a term ending in April 2027, respectively. The CFTC nominations came the same week the White House...
SEC files complaint against operator of ‘unregistered’ $33M Crowd Machine ICO
The United States Securities and Exchange Commission (SEC) has filed a suit against Australian Craig Derel Sproule for the allegedly “fraudulent and unregistered” sale “of digital asset securities” in an Initial Coin Offering his company conducted in 2018. The SEC alleges in a Jan. 6 complaint that Sproule’s company, Metavine, Inc. which operated the ICO for Crowd Machine (CMCT) from Jan. to April 2018, sold unregistered securities, never made the project operational and “materially misrepresented how it intended to use ICO proceeds.” In total, the SEC says Sproule raised at least $33 million dollars, but that he now lacks “sufficient capital to fund continued operations.” The reason for his lack of funds goes to the core of the SEC’s case. A Jan. 6 announcement from the SEC regarding the ...
Crypto predictions platform Polymarket fined $1.4M by CTFC
New York-based crypto predictions platform Polymarket has reached a settlement with the Commodity Futures Trading Commission (CFTC) to pay a fine of $1.4 million. Polymarket is a decentralized platform that enables users to bet on the outcomes of event markets such as pro-sports games and political elections via binary options contracts. On Jan. 3, the CFTC announced that it had entered an order filing and simultaneously settling charges against Polymarket, with the platform found to have operated an “illegal unregistered or non-designated facility” since June 2020. Under the order, Polymarket is required to pay a civil monetary penalty of $1.4 million along with winding back any markets on the platform that do not comply with CFTC and Commodity Exchange Act (CEA) regulations. Polymarket r...
