The Commodity Futures Trading Commission said it is suing Cash FX Group and three individuals over a $950 million foreign-exchange investment case involving cryptocurrencies.
The defendants are Cash FX and its CEO Huascar José López Castillo of Brazil, The Conversion Pros and its CEO Ronald Pope of Oregon, and Justin Halladay of Florida.
CFTC said His complaint was filed Friday in the U.S. District Court for the Middle District of Florida. It alleges that the defendants operated a multilevel marketing Ponzi scheme, soliciting and accepting more than $950 million for the purpose of trading retail foreign currency contracts in a commodity pool.
The company alleged that the defendants falsely claimed that the pool funds were managed by expert traders, proprietary algorithms and artificial intelligence and promised weekly returns of up to 15%.
The CFTC alleged that CashFX engaged in minimal forex trading and misappropriated the majority of participants’ funds, directing millions of dollars to each defendant while paying fictitious trading profits using new contributions from participants.
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Cash provided false accounting statements to FX participants, who lost at least $406 million, the CFTC alleged.
“The Enforcement Division continues to refocus on its core mission of protecting the public from fraud and manipulation,” said Enforcement Director David I. Miller said. “This critical step, and the widespread fraud it targets, reflects our steadfast commitment to combating fraud wherever we find it.”
Cointelegraph reported on September 18 that the CFTC submitted a new regulatory action covering crypto asset transactions and markets for White House review, as the agency moves forward with its approach to overseeing the digital asset sector.
While details of the planned regulations were not disclosed, the submission comes days after the Senate Clarity Act, legislation aimed at establishing a federal regulatory framework for the crypto market, failed to advance.
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