The regulator claims Digitex CEO pumped up the price of DGTX tokens in an effort to inflate the company’s holdings
According to Cointelegraph, the U.S. Commodity Futures Trading Commission (CFTC) takes legal action against Digitex LLC and its founder and CEO Adam Todd. The reason is failing to register the crypto futures exchange and manipulating the price of its DGTX token.
The filing states that the Digitex CEO used corporate entities to launch and operate an illegal digital asset derivatives trading platform, in violation of the Commodity Exchange Act. He also allegedly pumped up the price of DGTX tokens.
In addition, the regulator said Todd failed to register his service as a futures trading platform with the agency. CFTC also requires financial institutions to perform Know Your Customer checks and implement a customer information program. However, Todd previously planned to remove all KYC procedures from Digitex in an effort to protect user data. Therefore, CFTC sought a court order blocking Todd and Digitex from engaging in digital asset transactions. Moreover, the regulator intended for Digitex to pay civil monetary penalties, disgorgement, and restitution to the affected parties.
Both CFTC and SEc are often criticized for the “regulation by enforcement” approach to crypto in the United States. The CFTC’s legal action against Todd is only one in a recent string of crypto-related lawsuits brought by the agency.