Cash FX Group faces CFTC lawsuit over alleged $950M forex fraud scheme linked to cryptocurrency
According to the CFTC, Cash FX Group conducted very little actual foreign exchange trading while misusing the majority of investor contributions.
The Commodity Futures Trading Commission has announced legal action against Cash FX Group along with three associated individuals in connection with a $950 million foreign-exchange investment operation that involved cryptocurrency assets.
Named as defendants in the case are Cash FX Group alongside its chief executive Huascar Jose Lopez Castillo, who resides in Brazil, The Conversion Pros together with its chief executive Ronald Pope based in Oregon, and Justin Halladay, a resident of Florida.
According to the CFTC, the legal complaint was submitted on Friday to the US District Court for the Middle District of Florida. The filing accuses the defendants of running a multilevel marketing operation structured as a Ponzi scheme, through which they solicited and collected more than $950 million under the stated intention of executing trades in retail foreign currency contracts within a commodity pool structure.
The regulatory agency contended that the defendants made fraudulent representations claiming that pool assets were being managed by seasoned traders, sophisticated proprietary algorithms and cutting-edge artificial intelligence systems, while guaranteeing returns of up to 15% on a weekly basis.
According to the CFTC's allegations, Cash FX Group performed very limited actual forex trading activities and diverted the bulk of participant contributions for other purposes, utilizing fresh deposits from new participants to distribute fabricated trading earnings while funneling millions of dollars to each of the defendants.
Additionally, Cash FX Group supplied fraudulent accounting documentation to participants, who suffered losses of no less than $406 million, according to the CFTC's allegations.
The Division of Enforcement has continued to refocus on its core mission of protecting the public from fraud and manipulation. This critical action, and the massive fraud it targets, reflects our steadfast commitment to addressing fraud wherever we find it.
David I. Miller, Director of Enforcement
Cointelegraph reported Sept. 18 that the CFTC had submitted a new regulatory action covering crypto asset transactions and markets for White House review, as the agency moves forward with its approach to overseeing the digital asset sector.
While details of the planned regulations were not disclosed, the submission came days after the Senate failed to advance the CLARITY Act, legislation aimed at establishing a federal regulatory framework for crypto markets.