The Commodity Futures Trading Commission (CFTC) has flagged 34 firms offering trading in forex and digital currency options as unregistered foreign entities.
The roster of firms has been added to the CFTC’s Registration Deficient List (RED List), which now contains 202 firms that consumers are warned against transacting with. The list was started in 2015 as part of the CFTC’s effort to protect consumers in the country from fraud.
“A firm is added to the RED List when the CFTC determines, from investigative leads and public inquiries, that it is not registered with the Commission and appears to be acting in a capacity that requires registration, such as trading binary options, foreign currency (forex), or other products,” the CFTC’s press release reads.
In her statement concerning the list update, CFTC Commissioner Kristin Johnson voiced that consumer protection is becoming even more important with technological advancements making fraud easier to perform.
“In today’s global markets a foreign entity operating outside the United States may—with a few taps on a smartphone—reach potential U.S. customers through email, text message, I.M., chat app, or social media, and solicit them to invest, transfer, or deposit funds, or otherwise transact via platforms created and maintained outside of the United States,” she said.
The CFTC has already identified many “highly-organized fraudsters” that operate this way to prey on U.S. consumers. She added that consumers should be on the lookout for such frauds as transacting with unregistered entities leaves them exposed to “significant and concerning risks.”
CFTC intensifies crackdown on digital assets fraud
The list update with unregistered digital assets firms offering derivatives trading is only one of the CFTC’s latest actions against criminal actors in the space.
In June, the regulator issued charges in its biggest case yet involving digital currencies—a pyramid scheme operated by South African citizen Cornelius Johannes Steynberg in which investors lost $1.7 billion worth of BTC.
To enable the CFTC and other regulators to tackle crime in the digital assets industry more efficiently, U.S. lawmakers have proposed laws to define specific roles and delegate oversight powers clearly. The Responsible Financial Innovation Act, co-sponsored by Senator Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), will name the CFTC as the regulator in charge of digital assets classified as commodities.
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