Digitex Founder to Pay $16M and Faces Trading Ban in CFTC Resolution

Adam Todd, the founder of crypto exchange Digitex, has been directed by a federal court to pay nearly $16 million to settle allegations of operating an illegal platform and attempting to manipulate the native token, DGTX.

The U.S. Commodity Futures Trading Commission (CFTC) announced the resolution, which marks their first case involving a decentralized finance (DeFi) platform that failed to register as an exchange.

The court found Todd guilty of violating commodities laws and imposed a trading ban on him. However, the question remains whether Todd or the company has the financial resources to reimburse affected customers.

The judge presiding over the case in the U.S. District Court for the Southern District of Florida concluded that Todd ran the Digitex Futures exchange in violation of several commodities laws.

As a result, he faces a $12 million fine and approximately $4 million in disgorgement. The court order also prohibits Todd from engaging in trading activities. It is uncertain whether Todd or Digitex has the means to repay customers affected by their actions.

The court’s ruling highlighted Todd’s alleged attempt to manipulate Digitex’s native utility token, DGTX, by artificially inflating its price using a computerized bot.

This activity, known as “pumping,” aims to create a false sense of demand and drive up token prices. The judge’s findings shed light on the illegal practices and deceptive strategies employed by Todd within the exchange.

Despite the legal proceedings, Todd remains active as a developer for Digitex Games, a platform that utilizes the DGTX token, according to the company’s website. However, Todd did not respond to requests for comment regarding the recent court ruling.

Ian McGinley, the CFTC’s enforcement director, emphasized that the resolution of this case represents another instance of taking action against individuals and digital asset exchanges unlawfully offering futures contracts to U.S. customers.

The CFTC remains dedicated to protecting investors and upholding regulations within the cryptocurrency industry.