CFTC’s Landmark Year? Crypto Cases Account For Half Of 2023’s Major Fines

The crypto regulation landscape in the United States witnessed a defining year in 2023, as evidenced by the United States Commodity Futures Trading Commission’s (CFTC) recent enforcement report. According to the commission, half of all enforcement cases pursued during the fiscal year were tied to the burgeoning digital asset market.

As detailed in the CFTC’s statement, the Division of Enforcement (DOE) launched roughly 96 enforcement proceedings over the fiscal year. These cases spanned various infractions, including fraudulent schemes, market manipulation, and other serious violations that affect both the digital asset and swaps markets.

Collectively, these efforts by the CFTC culminated in a substantial sum of more than $4.3 billion in fines, restitution, and disgorgement orders, highlighting the financial impact of regulatory breaches.

Digital Assets In The Regulatory Spotlight

As disclosed in the report, the CFTC’s enforcement arm launched 47 distinct actions, accounting for 49% of the commission’s total caseload for the year.

These actions covered a broad spectrum, from combating fraudulent exchange activities and dismantling Ponzi schemes to securing court victories against a decentralized autonomous organization (DAO) and a digital asset futures platform. 

The commission’s litigation efforts also addressed cross-market manipulation facilitated by blockchain technology.

Chairman Rostin Behnam expressed pride in the CFTC’s dedication to curbing fraud and market manipulation, particularly in the crypto domain, which yielded a record-setting number of enforcement actions.

Behnam lauded the DOE’s performance, resulting in significant legal decisions and a commitment to maintaining transparency and fairness within markets under the CFTC’s jurisdiction. The chairman particularly noted:

The Commission continues to remain laser-focused on stopping and deterring fraud and manipulation in the U.S. I am proud of the Division of Enforcement’s groundbreaking work in the digital asset space, which resulted in a record number of cases, as well as staff’s dedication to holding registrants and market participants accountable for their conduct in CFTC regulated markets.

CFTC Continous Crackdown On Crypto

Notably, the US CFTC reaching a record enforcement action is quite evident in its crackdown on the crypto industry. Aside from the commission clash with Binance, the CFTC has sharpened its scrutiny on the decentralized finance (DeFi) sector.

In September, the commission issued concurrent orders targeting DeFi entities Opyn, ZeroEx, and Deridex, Inc. These entities faced allegations of conducting “unauthorized digital asset derivatives trading” and failing to adhere to mandated regulatory standards. The infractions centered around their operation within the DeFi ecosystem, utilizing blockchain protocols and smart contracts without “proper oversight.”

In response to these violations, the CFTC has mandated Opyn, ZeroEx, and Deridex to disburse civil monetary penalties amounting to $550,000 collectively. Furthermore, they are mandated to desist from further breaches of the Commodity Exchange Act (CEA) and CFTC regulations.

Complementing these enforcement actions, the CFTC has also been rewarding whistleblowers who supply critical intelligence leading to successful legal actions. As reported by Bitcoinist, the CFTC has disbursed $16 million in whistleblower rewards this fiscal year, incentivizing the revelation of malpractices within the crypto sphere.

Featured image from Unsplash, Chart from TradingView