The CFTC is suing an altcoin project in the ICO era for operating an illegal commodity futures exchange.
CFTC sues this altcoin project and its founder
The Commodity Futures Trading Commission (CFTC) filed a complaint against cryptocurrency futures exchange Digitex and its founder, Adam Todd, today. The US regulator says Digitex lacks the documentation to run its operations. According to the CFTC, Digitex has not lost the necessary license to comply with Bank Secrecy Act requirements. In addition, founder Adam Todd will also be prosecuted for manipulating Digitex (DGTX) price action.
Launched in 2018, Digitex has marketed itself as an exchange for cryptocurrencies, commodities, and other types of assets. One of its features was the zero fee model. The costs had to be met by printing DGTX. The allegations are that the exchange decentralized the exchange by spreading its liquidity among token holders instead of keeping it on their main servers.
However, the DGTX token was initially successful with this mechanism. In October 2018, the ATH price reached $0.16. It then formed the chart below, which extended to the current low of $0.0000234.
However, Digitex’s architecture is much more centralized than more exchanges like dYdX or GMX. Digitex provides escrow services for futures contracts. It also does not use automated market making (AMM) technologies or liquidity pools. In fact, the exchange’s website is down at the time of writing. While this is theoretically a “frontend” issue, it seems possible to simply stop processes in the background. If the stock market were completely decentralized, it would be impossible to stop.
CFTC signals a broad trend in regulation
Today’s complaint comes just a week after the CFTC sued the Ooki DAO for allegedly operating an illegal derivatives exchange. cryptocoin.com We have given the details in this article. By the way, there are some differences between the two cases. The Ooki protocol is a true smart contract platform. Therefore, it is not central. However, the CFTC, along with the founders of the protocol, made the unprecedented decision to hold stakers of BZRX tokens (Ooki’s token) accountable. It also issued subpoenas to all DAO members by submitting documents via the protocol’s online help chat box.
Compared to the SEC, the CFTC has historically been viewed as less hostile to the crypto industry. However, the agency’s lawsuit against Ooki DAO has raised deep concerns in the market. Blockchain Association attorney Jake Chervinsky stated that the move “could be the scariest example of enforcement in crypto history.” The CFTC’s complaint against Digitex should not be seen in the same light. Because the stock market cannot demand the same level of decentralization. This is one of the signs of further sanctions action.
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