Crypto25 September, 20262 min read
CFTC Sues Cash FX Group And CEO Over Alleged $950 Million Crypto-Linked Forex Ponzi Scheme
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CFTC sues Cash FX Group and CEO Huáscar López Castillo over $950M crypto-linked forex scheme. The agency alleges the scheme raised over $950 million with minimal actual forex trading.
CFTC targets Cash FX
The U.S. Commodity Futures Trading Commission sued Cash FX Group and three individuals in the U.S. District Court for the Middle District of Florida over an alleged $950 million foreign-exchange investment scheme tied to cryptocurrency.
“The Commodity Futures Trading Commission said it is suing Cash FX Group and three individuals in a $950 million foreign-exchange investment case involving cryptocurrency.”
The CFTC alleged the defendants operated a multilevel marketing Ponzi scheme, soliciting and accepting over $950 million for the purported purpose of trading retail foreign currency contracts in a commodity pool.
The CFTC alleged the defendants falsely claimed pool funds were handled by expert traders, proprietary algorithms and artificial intelligence, and promised up to 15% weekly returns.
The CFTC said it found Cash FX engaged in minimal forex trading and misappropriated most of the participant funds, using new contributions from participants to pay fictitious trading profits while directing millions of dollars to each defendant.
Allegations of diversion
The CFTC alleged the scheme used new contributions from participants to pay alleged trading profits that the regulator characterized as fictitious.
The CFTC alleged Cash FX provided false account statements to participants, and the agency said those investors lost at least $406 million.
David I. Miller, the CFTC’s enforcement director, said, "The Division of Enforcement has continued to refocus on its core mission of protecting the public from fraud and manipulation," in connection with the action.
The CFTC also alleged that the defendants promised returns of as much as 15% a week while conducting little to no actual forex trading.
What the case seeks
The CFTC sought restitution, disgorgement of allegedly ill-gotten gains, civil monetary penalties, trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations. The CFTC alleged the defendants falsely claimed pool funds were traded by expert traders, proprietary algorithms, and artificial intelligence, and the regulator said Cash FX engaged in minimal Forex trading.
“This critical action, and the massive fraud it targets, reflects our steadfast commitment to addressing fraud wherever we find it.”
The CFTC alleged the defendants misappropriated nearly all participant funds, using new contributions from participants to pay fictitious trading profits to other participants and paying millions of dollars to each defendant. The CFTC framed the action as a response to fraud and manipulation, with Miller saying, "This critical action, and the massive fraud it targets, reflects our steadfast commitment to addressing fraud wherever we find it."