CFTC Chair Behnam’s keynote speech at FIA Expo 2023 focused on FX and Crypto frauds
Over the past fiscal year, the CFTC has levied more than $6 billion in monetary relief through various enforcement actions. The agency is also moving against entities falsely claiming to be CFTC-registered futures commission merchants (FCMs) and registered foreign exchange dealers (RFEDs).
Chairman Rostin Behnam of the Commodity Futures Trading Commission (CFTC) addressed the Futures Industry Association Expo 2023, issuing a stern warning to all market participants, particularly in the foreign exchange (Forex) and digital asset sectors.
In his keynote speech, Behnam underscored the CFTC’s growing focus on Forex-related malfeasance as part of its broader mission to uphold market integrity.
CFTC’s Behnam highlights case against “My Forex Funds”
During his speech, Chairman Behnam laid out his agency’s evolving stance on enforcement and compliance. “Our duties do not change. Neither should yours,” he emphasized. As the Forex and broader financial markets navigate advancements in technology, the CFTC is making it clear that the rules still apply.
“Whether you are relying on technology or outsourcing to third-parties, your duties to comply with the rules and regulations and contribute to the integrity of our markets cannot be abdicated,” Behnam warned. The message is unequivocal: Cutting-edge technology does not absolve market participants from their responsibilities under the Commodity Exchange Act (CEA) and other regulations.
Behnam highlighted recent enforcement actions to demonstrate the CFTC’s resolve. Among them was the case against prop trading firm “My Forex Funds,” which allegedly defrauded more than 135,000 customers out of over $310 million. “Litigation is ongoing and is related to a separate action by the Ontario Securities Commission,” he added.
In another notable case, the CFTC secured an order imposing nearly $146 million in restitution and penalties against defendants connected with a fraudulent silver leasing scheme known as the “Maximus Program.”
Over the past fiscal year, the CFTC has levied more than $6 billion in monetary relief through various enforcement actions. The agency is also moving against entities falsely claiming to be CFTC-registered futures commission merchants (FCMs) and registered foreign exchange dealers (RFEDs).
The chairman also pointed to a rise in actions involving digital assets, stating that 45 of the agency’s enforcement actions this fiscal year pertained to digital asset misconduct. In one landmark case involving the Ooki Dao, the U.S. District Court found that decentralized autonomous organizations (DAOs) can be held liable under the CEA.
It’s clear that the CFTC aims to foster a culture of compliance and deterrence. Chairman Behnam concluded by reaffirming the Commission’s commitment to enforcement, emphasizing that this would continue to be a priority in the digital age. “Much of our regulatory and enforcement activities are designed to prevent and deter disruptions to the markets and harm to the public,” he stated.
Behnam’s stern remarks serve as a cautionary tale for the Forex industry and financial market participants at large. With regulatory oversight intensifying, the message is clear: compliance is not optional. The CFTC’s dogged pursuit of misconduct in Forex and other financial markets signals an era of increased scrutiny that industry players can ill afford to ignore.
