The CFTC filed a lawsuit on Friday in the U.S. District Court for the Middle District of Florida against Cash FX Group, The Conversion Pros, and three individuals in a $950 million investment case related to cryptocurrencies.

The defendants named in the complaint are Cash FX and its CEO Huascar Jose Lopez Castillo (Brazil), The Conversion Pros and its CEO Ronald Pope (Oregon), and Justin Halladay (Florida). According to the regulator, they operated a multi-level Ponzi scheme, raising over $950 million purportedly for trading retail foreign currency contracts as part of a commodity pool.

CFTC: Minimal Trading and Misappropriation of Funds

The complaint states that Cash FX conducted only minimal forex trading and misappropriated most of the participants' funds. New contributions were used to pay out fictitious "trading profits," with millions of dollars transferred to each of the defendants. It was claimed that the funds were managed by "expert traders" using proprietary algorithms and artificial intelligence, and participants were promised returns of up to 15% per week.

Participant Losses — At Least $406 Million

According to the lawsuit, Cash FX provided participants with false account statements, and their total losses amounted to at least $406 million. "The Division of Enforcement has continued to refocus on its core mission of protecting the public from fraud and manipulation," said Director of Enforcement David I. Miller, noting that this action demonstrates a commitment to combating fraud.

Regulatory Agenda: CFTC Initiative Under White House Review

On September 18, the CFTC submitted a new regulatory initiative to the White House for review, concerning crypto asset transactions and digital asset markets; details were not disclosed. The filing came a few days after the Senate failed to advance the CLARITY Act, a bill on a federal regulatory framework for the crypto market.