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Crypto Seizures: Half of CFTCs Enforcement Actions Have been Related to Digital Assets

Last Updated November 8, 2023 3:00 PM
Josh Adams
Last Updated November 8, 2023 3:00 PM
Key Takeaways
  • The CFTC has had a bumper year for crypto enforcement.
  • New data outlines the agency’s new focus on digital assets.
  • The regulator also took action against large U.S. banks.

2023 has been a year of legal high drama for the crypto industry, with a record amount of headlines discussing the litigation of digital assets—both inside and outside the courtroom.

Now, new figures  from the Commodity Futures Trading Commission (CFTC) on its enforcement results for the 2023 fiscal year confirm that picture. Nearly half of the agency’s 96 enforcement actions have targeted misconduct related to digital assets.

Crypto Makes Up Half Of All Cases

The CFTC filed 47 cases involving cryptocurrencies and other digital assets. This represents 49% of all actions in the 2023 fiscal year, which ended in September. The agency called it a “record-setting number of digital asset cases.”

Some of the regulator’s actions involve some of the industry’s most famous names, including charges against major exchanges like FTX and Binance. The CFTC also accused FTX founder Sam Bankman-Fried of fraud and misusing customer funds. The former crypto mogul was found guilty on seven charges on November 3 after five weeks of trial. The regulator has also similarly alleged that Binance operated an unregistered derivatives exchange.

For the first time, the agency also sued a decentralized autonomous organization. It won a default judgment against the Ooki DAO for operating an illegal crypto trading platform.

In addition, the CFTC brought its first case against a decentralized finance protocol . It settled charges with the operators of DeFi programs for offering illegal leveraged trading to retail investors.

Understandably, considering the rapid rise of digital assets over the last few years, the agency sees the space as an important new area of focus. CFTC Director of Enforcement, Ian McGinley, said  crypto cases demonstrate the agency’s “unwavering commitment to accountability, deterrence, customer protection, and ensuring market integrity.”

Earlier this year, the Commodity Futures Trading Commission announced  that it granted over $16 million to whistleblowers in fiscal year 2023. Most of them relate to crypto-related incidents. This includes awards of more than $15 million to two individuals who provided significant information leading to successful CFTC enforcement cases.

CFTC Stuck It To Big Banks

Beyond crypto, the CFTC took action against manipulation and spoofing in traditional markets. It settled charges that HSBC Bank USA engaged in spoofing and manipulative trading related to swaps.

The agency also targeted reporting and risk management failures. Major banks like Goldman Sachs, JPMorgan,record-setting, and Bank of America paid millions in fines for inadequate oversight of communication records.

The statement made clear the CFTC plans to prioritize emerging technologies like crypto as well as environmental fraud. It formed new task forces this year to focus on those issues.

Chairman Rostin Behnam said digital assets represent “groundbreaking work,” adding that the agency will continue taking action to “protect customer funds and ensure fair prices.”

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