CFTC pursues digital currency firm for illegal trading

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The U.S. Commodity Futures Trading Commission is pursuing a digital currency trading company alleged to be engaged in illegal transactions. The regulator also accuses the firm of failing to register as a futures commission merchant.

Laino Group Limited, better known as PaxForex, engaged in unlawful retail commodity transactions in Ether, Litecoin and BTC, the CFTC said in a press release. The company, registered in St. Vincent and the Grenadines, also offered trading in gold and silver, having started its activities in March 2018.

“The defendant violated the CEA by failing to conduct these transactions subject to the rules of a board of trade that had been designated or registered by the CFTC as a contract market,” the watchdog alleges.

CFTC claims that PaxForex acted as a futures commission merchant (FCM) by accepting and soliciting orders for retail commodity transactions. The firm also acted as the counterparty in such transactions, extending credit to its clients and accepting securities, money and digital currencies in exchange for margin trades and contracts.

“Despite acting as an FCM, the defendant failed to register with the CFTC as required.”

In its litigation, the watchdog is seeking disgorgement of ill-gotten gains, restitution, civil monetary penalties, permanent registration and trading bans. It’s also seeking to have the Southern District of Texas Court issue a permanent injunction against further violations of the Commodity and Exchanges Act (CEA) as charged.

CFTC’s Enforcement Division Director James McDonald remarked, “This action shows the CFTC’s continued commitment to ensuring that entities offering leveraged, retail transactions within our jurisdiction—including those involving digital assets—register with the CFTC. We will vigorously enforce these requirements to preserve market integrity and protect customers.”

The watchdog also called on investors to verify a company’s registration with the Commission before they commit their funds.

CFTC has continued to crack down on digital currency service providers it believes are violating security laws. In August, it filed a request for default judgment against Control-Finance and its founder Benjamin Reynolds. The watchdog sought $142 million in restitution from Reynolds and a civil monetary penalty amounting to $429 million.