Washington, D.C. — The Commodity Futures Trading Commission today announced that the U.S. District Court for the District of New Mexico entered a consent order for permanent injunction, monetary sanctions, and equitable relief against Douglas Lien of Santa Fe, New Mexico. The court imposed more than $10.3 million in monetary sanctions and relief for defendant’s wrongdoing, including his misappropriation of client money intended for futures trading. According to the order, the defendant admitted to misappropriating the funds and issuing false account statements to conceal his fraud for nearly 20 years.
The order requires that Lien pay restitution of $5,195,679 and a civil penalty of $5,195,679, and imposes permanent trading and registration bans. The judgment resolves a CFTC enforcement case filed on December 9, 2019. [See CFTC Press Release No. 8094-19]
Case Background
According to the order, Lien admits that from at least August 2000 until December 9, 2019, he solicited more than $14.2 million from 45 individuals to manage their trading in commodity futures, specifically U.S. Treasury Bond futures. However, Lien did not invest the client funds, but instead operated a classic Ponzi scheme, using the money to pay other clients. He also kept more than $3.5 million for so-called “management fees” he billed clients based on false trading profits. In addition, Lien gave his clients inaccurate account statements, including erroneous annual IRS Form 1099s that reported millions in fake profits. The order also states Lien failed to register as a futures commission merchant (FCM) to legally solicit and accept money from commodity futures clients for futures trades. 
The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure that wrongdoers are held accountable.
The CFTC appreciates the cooperation and assistance of the State of New Mexico Securities Division.
The Division of Enforcement staff responsible for this case are Bryan Hsueh, Susan B. Padove, David A. Terrell, Scott R. Williamson, and Robert T. Howell.

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Washington, D.C. — The Commodity Futures Trading Commission today announced that the U.S. District Court for the District of New Mexico entered a consent order for permanent injunction, monetary sanctions, and equitable relief against Douglas Lien of Santa Fe, New Mexico. The court imposed more than $10.3 million in monetary sanctions and relief for defendant’s wrongdoing, including his misappropriation of client money intended for futures trading. According to the order, the defendant admitted to misappropriating the funds and issuing false account statements to conceal his fraud for nearly 20 years.
The order requires that Lien pay restitution of $5,195,679 and a civil penalty of $5,195,679, and imposes permanent trading and registration bans. The judgment resolves a CFTC enforcement case filed on December 9, 2019. [See CFTC Press Release No. 8094-19]
Case Background
According to the order, Lien admits that from at least August 2000 until December 9, 2019, he solicited more than $14.2 million from 45 individuals to manage their trading in commodity futures, specifically U.S. Treasury Bond futures. However, Lien did not invest the client funds, but instead operated a classic Ponzi scheme, using the money to pay other clients. He also kept more than $3.5 million for so-called “management fees” he billed clients based on false trading profits. In addition, Lien gave his clients inaccurate account statements, including erroneous annual IRS Form 1099s that reported millions in fake profits. The order also states Lien failed to register as a futures commission merchant (FCM) to legally solicit and accept money from commodity futures clients for futures trades. 
The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure that wrongdoers are held accountable.
The CFTC appreciates the cooperation and assistance of the State of New Mexico Securities Division.
The Division of Enforcement staff responsible for this case are Bryan Hsueh, Susan B. Padove, David A. Terrell, Scott R. Williamson, and Robert T. Howell.

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Washington, D.C. — The Commodity Futures Trading Commission today announced that Judge Liles C. Burke of the U.S. District Court for the Northern District of Alabama entered a default judgment against Negus Capital Incorporated (NCI) of Muscle Shoals, Alabama finding that it, through its owner Aaron B. Butler, engaged in fraudulent solicitation, misappropriation, and registration violations in connection with binary options trading.
The court’s March 31, 2021 order requires NCI to pay $294,545 in restitution to defrauded customers and a civil monetary penalty of $883,635. The order also permanently enjoins NCI from engaging in conduct that violates the Commodity Exchange Act and CFTC regulations, registering with the CFTC, and trading in any CFTC-regulated markets.
The court’s order stems from a 2019 enforcement action that charged Butler and NCI with fraudulent solicitation, misappropriation, and registration violations. [See CFTC Press Release No. 8070-19] The court previously entered an order granting a permanent injunction against Butler and requiring him to pay a combined $755,000 in restitution and civil monetary penalty for his violations of the Commodity Exchange Act and CFTC regulations. [See CFTC Press Release No. 8184-20]
The order finds that from March 16, 2017, through February 21, 2018, NCI, through Butler, unlawfully solicited and accepted $294,545 from 70 members of the public to trade binary options contracts on the North American Derivatives Exchange (Nadex), defrauded those customers, and operated as an unregistered commodity pool operator.
Case Background
The order finds that NCI, through Butler, misrepresented that for customer deposits between $500 and $5,000, he would pool those customers’ funds into a single trading account at Nadex, and Butler, acting as the trader for NCI, would use those funds to trade binary options on the customers’ behalf. The order also finds that NCI, through Butler, misrepresented that it would deposit each customer payment of $5,000 or more into separate customer trading accounts at Nadex, and Butler would manage and trade binary options on behalf of customers. Rather than trade customer funds as promised, NCI instead misappropriated most, if not all of the funds for Butler’s personal benefit, including spending tens of thousands of dollars on jewelry, purchases at Apple stores, and Toys “R” Us gift cards.
The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable.
The CFTC thanks the Alabama Securities Commission for its assistance in this matter.
The Division of Enforcement staff members responsible for this case are James Deacon, Kevin Samuel, Erica Bodin and Rick Glaser.

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Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and settling charges against Glenn Olson formerly of Brooklyn, New York, for his role in a binary options fraud that harmed U.S. customers involving Blue Bit Banc, a United Kingdom company, and Blue Bit Analytics, Ltd, located in Turks and Caicos.
The order requires Olson to disgorge all of his ill-gotten gains, totaling $241,070. He is also ordered to pay restitution of $846,405, a joint obligation with others found liable and enjoined by a federal court in a prior CFTC enforcement action. [See CFTC v. Kantor, No. 18-cv-2247-SJF-ARL (E.D.N.Y. Oct. 23, 2019) and CFTC Press Release No. 8069-19] Olson is also ordered to cease and desist from further violating the Commodity Exchange Act and CFTC regulations, from trading on or subject to the rules of any CFTC-registered entity, and from engaging in any activities requiring registration with the CFTC. 
Case Background
The order finds—and Olson admitted—that from approximately April 2014 through March 2018, he was affiliated with Blue Bit Banc and related entities, selling binary options to customers for Blue Bit using alias names and also supervising other sales staff at Blue Bit’s Manhattan office. Olson also admitted that, as part of the scheme, he and others misrepresented the profitability of trading through Blue Bit, manipulated or fabricated purported trades in their customers’ accounts to the customers’ disadvantage, prevented customers from withdrawing funds, and misappropriated customer funds.
The order states that Olson also admitted he knowingly made false statements, omitted statements of material fact, and took other actions to defraud customers, while receiving disbursements totaling $241,070.30. In addition, Olson was involved in the conversion of some customers’ Blue Bit account holdings into ATM Coin, a worthless cryptocurrency that was represented as being worth substantial money. According to the order, at least 27 customers lost a total of $846,405 as a result of the fraudulent scheme.  
The CFTC cautions victims that restitution orders may not result in the recovery of money lost, because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The Division of Enforcement staff members responsible for this case are Susan Padove, Joseph Patrick, David Terrell, Scott Williamson, and Robert Howell.
******
CFTC’s Binary Options Fraud Advisories
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Binary Options and Fraud Advisory, which alerts customers to this type of fraud and list simple ways to spot it.
The CFTC also strongly urges the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.

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Washington, D.C. — The Commodity Futures Trading Commission today issued a Customer Advisory strongly encouraging the public to research and understand the commodity futures markets, physical markets, and securities markets before trading based on information on social media. The advisory also warns of the risks associated with futures trading or buying physical commodities, such as precious metals. The Market Participants Division (MPD) issued the customer advisory in recognition of National Financial Capability Month, which began April 1. 
“Recent trading activity and market volatility triggered by posts on online message boards and social media platforms have given our Office of Customer Education and Outreach a perfect opportunity to remind investors of possible risks involved when making trading decisions that are impulsive or not thoroughly researched,” said MPD Acting Director Amanda Olear. “Investing in precious metals is not inherently risky, however investors need to know it is not risk-free.”
Many traders, including experienced securities investors, may not fully understand the differences or risks associated with futures trading or buying physical commodities, such as precious metals. The new Customer Advisory helps to shed light on those subjects with a list of seven important items to consider before trading.
About the Office of Customer Education and Outreach (OCEO)
OCEO, an office of MPD, is dedicated to helping customers protect themselves from fraud or violations of the Commodity Exchange Act through the research and development of effective financial education materials and initiatives. OCEO engages in outreach and education to retail investors, traders, industry organizations, and the agricultural community. The office also frequently partners with federal and state regulators as well as consumer protection groups. The CFTC’s full repository of customer education materials can be found at: https://www.cftc.gov/LearnAndProtect.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
The Customer Advisory is available in full below and on cftc.gov. 
*****
The Commodity Futures Trading Commission advises the public to thoroughly research and fully understand how commodity futures markets, physical markets, and securities markets differ—as well as the risks associated with speculative trading—before acting on tips or other information communicated via social media.
Recently, posts on online message boards and social media platforms have been cited as contributing to increased volatility in markets for certain commodities. Large numbers of individual speculators—traders who try to profit from short-term trades—rushed into commodity-backed exchange traded products, physical commodities such as gold and silver, commodity futures, and options contributing to brief but dramatic price swings.
Unfortunately, those who came late, held on too long, or didn’t fully understand what they were doing, may have lost big. For every post about “taking it to the moon,” there are many more posts about individuals losing some or all of their money. 
Speculative short-term trading is always risky, but mixing it with unfamiliar products and markets, leverage, and advice from anonymous individuals is a recipe for disaster.
What to Consider
Before jumping into any trade that involves commodity futures or physical commodities like precious metals, here are some things to consider: 
Only trade with “risk capital.” This is money you can afford to lose, not the cash used for basic necessities, savings to cover emergencies, or long-term needs like retirement. Also, research has shown that after commissions the majority of individual speculators lose money.[1] 
Experience in one market may not transfer to success in others. Markets are not all the same. Learning the differences between securities markets, futures markets, options markets, and physical markets can help you avoid costly mistakes. For example, you cannot “buy the dip” in futures markets when a spot price of a commodity looks like a bargain. Futures contracts convey the right to buy or sell an asset at some point in the future. They do not convey ownership in the asset itself. Contracts are also time-limited and cannot be held indefinitely waiting for prices to rebound. 
Commodity-backed exchange traded products (ETPs) are sold on stock exchanges but can own physical commodities such as gold or silver, be wholly backed by derivatives, or hold a combination of assets. The ETPs’ underlying holdings and trading strategies will determine how they respond to changes in the markets and the economy. It is important to know exactly what is in a commodity ETP, and how its trading strategy can be affected by market forces. Always ensure that you receive or have direct access to timely prospectuses and other disclosure documents, and read them carefully. Take your time, do your research, and ask questions. 
It’s better to develop your own trading plan targeted to your particular situation and risk tolerance than to follow others. As the saying goes, plan the trade and trade the plan. Having a plan will help take some of the emotion out of trading and help avoid common biases, like selling winners too soon or holding losers too long. 
Consider the information’s source. Professional advisors and brokers are regulated and have limits on what they can recommend online. The individuals behind online tips and information may not have significant relevant knowledge or experience or they may be newcomers themselves. Some may already be holding the asset they are trying to pump or have ulterior motives. Similarly, don’t pay for signals or online programs that promise winning trades. There are no silver bullets and programs based on past performance cannot guarantee future results. 
Although investing in physical precious metals is commonly considered to be a safe way to ride out volatile markets or economic uncertainty, it is not risk-free. Spot prices—the cash price for immediate delivery—can be volatile, and the transaction costs for bullion can be high. Dealers set their own spreads. The spread is the difference between the price dealers will sell you a specific coin or ingot and the price they would buy it back from you. These spreads can often be 10 percent or more, which means the value of your investment must climb more than 10 percent for you to break even, let alone cover taxes, storage costs, and possibly insurance. Always compare dealers’ prices including spreads on specific coins or ingots, as well as fees and other charges. 
If you would like to learn to trade, there are many free or low-cost resources available online. But be careful, as there are also a lot of fraudsters using get-rich-quick promises to sell classes, seminars, books, and programs. Start with your broker to see if it offers a market simulator that uses live market data. Use it to develop trading strategies and practice before risking real money. The exchanges and some industry groups also offer educational information (see box below). To learn more about how to protect yourself in markets regulated by the CFTC, visit cftc.gov/LearnAndProtect.
 

Sources to Help You Learn More about Futures and Options Trading

Before you pay for classes or training software, you may find that it is useful to tap into free resources to learn how markets and trading really work. The more you learn from a variety of sources, the better situated you will be to identify misinformation and avoid scams.

Although not exhaustive, the list below offers some potential resources to help you get started.

CME Institute (cmegroup.com/education.html) includes free online courses and tools for practicing trades.
Futures Fundamentals (futuresfundamentals.org) includes articles and videos on how futures markets work and how to trade.
Intercontinental Exchange (theice.com/support/education) offers in-person and online courses covering a range of derivatives market topics.
The Institute for Financial Markets (theifm.org) offers a collection of resources, including a printed guide to derivatives markets, available for purchase.
Options Industry Council (optionseducation.org) hosts free webinars and courses geared to different knowledge levels, along with educational videos, podcasts, and articles.
Your local library may offer free educational sessions on trading and investing, as well as books on trading strategies.

This article was prepared by the Commodity Futures Trading Commission’s Office of Customer Education and Outreach. It is provided for general informational purposes only and does not provide legal or investment advice to any individual or entity. Please consult with your own legal advisor before taking any action based on this information. This advisory references non-CFTC websites, and organizations. The CFTC cannot attest to the accuracy of information in those non-CFTC references. Reference in this article to any organizations or the use of any organization, trade, firm, or corporation name is for informational purposes only and does not constitute endorsement, recommendation, or favoring by the CFTC.

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Washington, D.C. — The Commodity Futures Trading Commission today filed a civil enforcement action in the United States District Court for the Eastern District of Washington charging Easterday Ranches, Inc., a Pasco, Washington based cattle feedyard, and Cody Easterday, co-owner and formerly president of Easterday Ranches, for engaging in fraud in connection with the sale of more than 200,000 non-existent head of cattle to a beef processor, making false statements to an exchange, and violating exchange-set position limits.
The CFTC’s complaint seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans as to Easterday, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations, as charged.
“The Commission will vigorously prosecute fraud committed in connection with derivatives trading, including making false statements to exchanges to exceed the applicable limits on their positions,” said Acting Director of Enforcement Vincent McGonagle.
Case Background
According to the complaint, Easterday accumulated more than $200 million in losses over a 10-year period from speculative trading in the cattle futures markets. To meet margin calls, Easterday devised a scheme to defraud one of his biggest business partners, a South Dakota-based beef producer. The complaint alleges that, from at least October 2016 to November 2020, Easterday caused Easterday Ranches to submit false invoices and reimbursement requests relating to more than 200,000 head of cattle that Easterday Ranches never actually purchased or raised on the producer’s behalf. Through the use of fraudulent invoices and reimbursement requests, Easterday Ranches received from the producer more than $233 million to which it was not entitled.
In addition, the complaint alleges that Easterday caused Easterday Ranches to report false or misleading information concerning its cattle inventory, purchases, and sales to the Chicago Mercantile Exchange in at least two hedge exemption applications seeking permission to exceed the exchange’s position limits. Easterday allegedly made the false statements to the exchange in 2017 and 2018 to avoid disciplinary actions and scrutiny when Easterday Ranches exceeded exchange-based position limits in the live cattle and feeder cattle futures markets. Because they were based on false or misleading information, the hedge exemptions were invalid. As a result, Easterday Ranches violated exchange-set position limit violations on at least two occasions.
The Division of Enforcement staff members responsible for this case are Ben Sedrish, Ashley J. Burden, Joseph Patrick, Yusuf Capar, Allison V. Passman, Scott Williamson, and Robert Howell.

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Source: PYMNTS.com

Cryptocurrency has been the talk of the town lately and people more or less understand this concept of Cryptocurrency and Bitcoin trading. However, we can all agree that back in 2016-17, there was not much clarity offered to the public on what cryptocurrency actually is and how do we trade in the stock market with this digital currency as it was a game of profits at that time.
Having said that, new technology will lead to newer crimes and scams, especially when the users are not well informed about the subject. One such incident that took place in the year 2017 involved a United Kingdoms resident who was scamming the people into sending him more and more cryptocurrency with a promise to trade their digital currency in the market for a higher rate of returns.
The Commodity Futures Trading Commission has recently on Friday announced that the federal court of Manhattan requires this U.K man named Benjamin Reynolds to pay USD 429 million as fine and USD 143 million in restitution for his crime to the authorities.

However, collecting the total amount of USD 571 million as penalty for scamming people to send Reynolds more than 20,000 Bitcoin can be a bit of a challenge for the United States authorities because no one knows where the alleged fraudster is.
The main story behind his crime as mentioned in a report by Bloomberg Quint revolved around the time between May 2017 and October 2017 where the alleged fraudster, Reynolds who is from Manchester solicited and collected Bitcoin from consumers, telling them the selling story that he would trade their Bitcoin cryptocurrency tokens in the virtual currency stock markets to increase their profit margins for them, says the Commodity Futures Trading Commission (CFTC). The report further clarifies that no such trades were made by Reynolds on behalf of his so-called clients and that he had made these people no money at all. The volume of Bitcoin that we are dealing with in this case is more than 20,000 which valued at over USD 143 million at that time, back in 2017. The alleged fraudster duped almost around 170 customers in the United States and the authorities will be taking strict actions against the same.
The Southern District of New York issued an order earlier this month, as reported by Bloomberg Quint which mentioned that Reynolds has failed to appear or answer to the complaints issued in his name by the CFTC.  The authorities have notified the victims that their assets may or may not recover depending on the fraudsters ability to pay.

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Washington, D.C. — The Commodity Futures Trading Commission today announced that the U.S. District Court for the Southern District of New York entered a default judgment against Benjamin Reynolds, purportedly of Manchester, England, finding that he operated a fraudulent scheme to solicit bitcoin from members of the public and misappropriated customers’ bitcoin. This case was brought in connection with the Division of Enforcement’s Digital Assets Task Force.
The court’s March 2, 2021 order requires Reynolds to pay nearly $143 million in restitution to defrauded customers and a civil monetary penalty of $429 million. The order also permanently enjoins Reynolds from engaging in conduct that violates the Commodity Exchange Act and CFTC regulations, registering with the CFTC, and trading in any CFTC-regulated markets.
The judgment is the result of a 2019 enforcement action brought by the CFTC charging Reynolds, conducting business as Control-Finance Limited, with fraud and misappropriation. [See CFTC Press Release No. 7938-19]
Case Background
Between May 2017 and October 2017, Reynolds used a public website, various social media accounts, and email communications to solicit at least 22,190.542 bitcoin, valued at approximately $143 million at the time, from more than 1,000 customers worldwide, including at least 169 individuals residing in the U.S. 
Among other things, Reynolds falsely represented to customers that Control-Finance traded their bitcoin deposits in virtual currency markets and employed specialized virtual currency traders who generated guaranteed trading profits for all customers. He also constructed an elaborate affiliate marketing network that relied on fraudulently promising to pay outsized referral profits, rewards, and bonuses to encourage customers to refer new customers to Control-Finance. In fact, Reynolds made no trades on customers’ behalf, earned no trading profits for them, and paid them no referral rewards or bonuses. While Reynolds represented that he would return all bitcoin deposits to customers of Control-Finance by late October 2017, he never did and instead retained the deposits for his own personal use. Customers lost most or all of their bitcoin deposits as a result of the scheme.
The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable.
The CFTC appreciates the assistance of the British Columbia Securities Commission and the UK Financial Conduct Authority. 
The Division of Enforcement staff members responsible for this action are Dmitriy Vilenskiy, Kyong J. Koh, Julia C. Colarusso, Hillary Van Tassel, Jonah E. McCarthy, A. Daniel Ullman II, Luke B. Marsh, and Paul G. Hayeck. Additionally, Daniel J. Grimm and John Einstman contributed to the case while members of the Division of Enforcement. CFTC staff members, Christopher Giglio, Lauren Fulks, and Mary Lutz, also assisted in this matter.

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Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and settling charges against Emilio José Heredia Collado of Lafayette, California for engaging in attempted manipulation and manipulation of a U.S. price-assessment benchmark relating to physical fuel oil products. Heredia engaged in this unlawful conduct for more than four years while employed as a fuel oil trader at a commodity trading firm and then at the U.S. affiliate of a multinational commodity trading company that acquired it. 
Heredia admits the facts of his manipulation and acknowledges that his conduct violated the Commodity Exchange Act (CEA) and CFTC regulations.
The order permanently bans Heredia from trading commodity interests and requires him to comply with undertakings never to engage in other commodity-interest related activities, including applying for registration and acting as a principal, agent, officer or employee of any person registered, required to be registered, or exempt from registration. The order also imposes a $100,000 civil monetary penalty.
“This enforcement action demonstrates that manipulation of energy prices will not be tolerated, and the CFTC will aggressively protect market participants who rely on the integrity of commodity benchmarks,” said Acting Director of Enforcement Vincent McGonagle. 
Separate Criminal Action
In a separate, parallel matter, the Department of Justice’s Fraud Section today announced a criminal charge against Heredia in the U.S. District Court for the Northern District of California. [See United States v. Heredia, Case No. 21-CR-0109 (N.D. Cal.)] Heredia pleaded guilty to one count of conspiracy to manipulate the price of a commodity in interstate commerce in violation of the CEA. 
Case Background
The order finds that from as early as June 2012 through at least August 2016, Heredia and others at the firms where he was employed sought to increase profits from their oil products trading by manipulating a U.S. price-assessment benchmark relating to physical fuel oil products in order to benefit the firms’ trading positions. Heredia also engaged in this conduct with the specific intent to manipulate the benchmark, and could and did create artificial prices.
The order recognizes Heredia’s entry into a formal cooperation agreement with the Division of Enforcement and his undertaking to continue to cooperate with the Division in connection with the subject matter of the order. 
The Division of Enforcement staff members responsible for this case are Gates S. Hurand, Peter Janowski, David W. MacGregor, R. Stephen Painter Jr., Michael Cazakoff, Matthew Edelstein, Patrick Marquardt, Jordon Grimm, Lenel Hickson Jr., and Manal M. Sultan.

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Cryptocurrency exchange Coinbase Global Inc. has been fined $6.5 million by the U.S. Commodity Future Trading Commision to settle allegations that it undertook reckless false, misleading or inaccurate reporting as well as so-called wash trading between 2015 and 2018.
Along with the fine, announced Friday, Coinbase is also subject to stop any further violations of the Commodity Exchange Act or CFTC regulations.
Between January 2015 and September 2018, Coinbase is said to have operated two automated trading programs, Hedger and Replicator, that generated orders that at times matched one another on the GDAX electronic trading platform operated by the company. Although the GDAX rules did disclose that Coinbase was trading on the GDAX it failed to disclose that Coinbase was operating more than one trading program and trading through multiple accounts.
The problem is that in operating multiple programs and accounts, Coinbase was essentially creating trades between itself that then boosted trading volume and could have misled traders about the real volume on the exchange, which today is known as Coinbase Pro.
The boosted trading data from Coinbase was also then fed to third-party reporting services such as the CME Bitcoin Real Time Index, CoinMarketCap and the NYSE Bitcoin Index. According to the order, “transactional information of this type is used by market participants for price discovery related to trading or owning digital assets and potentially resulted in a perceived volume and level of liquidity of digital assets, including bitcoin, that was false, misleading or inaccurate.”
From August to September 2016, the CTFC also found, a former Coinbase employee used a “manipulative or deceptive device” by intentionally trading in Litecoin/bitcoin pairs on GDAX that matched each other as “wash trades,” creating a misleading appearance of liquidity in Litecoin. Wash trading is a form of market manipulation where an investor simultaneously sells and buys the same financial instruments to create artificial activity in the marketplace.
As part of the order, Coinbase itself has not admitted or denied the CFTC’s charges. A spokesperson for the exchange told The Verge Saturday that the settlement order “does not include any finding of harm to any Coinbase customer.”
The fine from the CTFC comes ahead of Coinbase’s plans to go public. After first announcing that it had filed a draft registration for an initial public offer in December, Coinbase said it had decided to go public via a direct listing Jan. 28 instead.
Image: Coinbase

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Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and settling charges against digital asset exchange operator Coinbase Inc., based in San Francisco, California, for reckless false, misleading, or inaccurate reporting as well as wash trading by a former employee on Coinbase’s GDAX platform.
The order requires Coinbase to pay a civil monetary penalty of $6.5 million and to cease and desist from any further violations of the Commodity Exchange Act or CFTC regulations, as charged.
“Reporting false, misleading, or inaccurate transaction information undermines the integrity of digital asset pricing,” said Acting Director of Enforcement Vincent McGonagle. “This enforcement action sends the message that the Commission will act to safeguard the integrity and transparency of such information.”
Case Background
According to the order, between January 2015 and September 2018, Coinbase recklessly delivered false, misleading, or inaccurate reports concerning transactions in digital assets, including Bitcoin, on the GDAX electronic trading platform it operated. During this period, Coinbase operated two automated trading programs, Hedger and Replicator, which generated orders that at times matched with one another. The GDAX Trading Rules specifically disclosed that Coinbase was trading on GDAX, but failed to disclose that Coinbase was operating more than one trading program and trading through multiple accounts.
In addition, the order finds that while Hedger and Replicator had independent purposes, in practice the programs matched orders with one another in certain trading pairs, resulting in trades between accounts owned by Coinbase. Coinbase included the information for these transactions on its website and provided that information to reporting services, either directly or through access to its website. Reporting firms such as Crypto Facilities Ltd., which publishes the CME Bitcoin Real Time Index, and CoinMarketCap OpCo, LLC, which posts such transactional information on its website, received access to Coinbase’s transactional information via Coinbase’s Application Programming Interface, while the NYSE Bitcoin Index, received it directly in transmissions from Coinbase. According to the order, transactional information of this type is used by market participants for price discovery related to trading or owning digital assets, and potentially resulted in a perceived volume and level of liquidity of digital assets, including Bitcoin, that was false, misleading, or inaccurate. 
The order also finds that over a six-week period—August through September 2016—a former Coinbase employee used a manipulative or deceptive device by intentionally placing buy and sell orders in the Litecoin/Bitcoin trading pair on GDAX that matched each other as wash trades. This created the misleading appearance of liquidity and trading interest in Litecoin. Coinbase is therefore found to be vicariously liable as a principal for this employee’s conduct.
The Division of Enforcement staff members responsible for this case are Jon J. Kramer, Bryan T. Hsueh, Elizabeth N. Pendleton, Scott R. Williamson, and Robert T. Howell.

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Washington, D.C. — Commodity Futures Trading Commission Acting Chairman Rostin Behnam today announced he has established the Climate Risk Unit (CRU) to support the agency’s mission by focusing on the role of derivatives in understanding, pricing, and addressing climate-related risk and transitioning to a low-carbon economy. Comprised of staff from across the CFTC’s operating divisions and offices, the CRU represents the agency’s next step in response to what has become a global call to action on tackling climate change. The CRU is intended to accelerate early CFTC engagement in support of industry-led and market-driven processes in the climate—and the larger ESG—space critical to ensuring that new products and markets fairly facilitate hedging, price discovery, market transparency, and capital allocation.
“The COVID-19 pandemic as well as increasingly severe weather and environmental impacts have firmly established the role of financial regulators in providing decisive leadership in times of market stress,” said Acting Chairman Behnam. “Climate change poses a major threat to U.S. financial stability, and I believe we must move urgently and assertively in utilizing our wide-ranging and flexible authorities to address emerging risks. The CFTC’s unique mission focused on risk mitigation and price discovery puts us on the front lines of this effort. Leveraging the CFTC’s personnel and expertise demonstrates our commitment to taking thoughtful and deliberate next steps toward building a climate-resilient financial system.”
The formation of the CRU follows years of climate leadership at the CFTC by Behnam, who spearheaded the effort to establish the Market Risk Advisory Committee’s Climate-Related Market Risk Subcommittee and requested the September 2020 report on Managing Climate Risk in the U.S. Financial System.
As the U.S. joins governing bodies around the world in recognizing the need to reduce carbon emissions, the derivatives markets regulated by the CFTC will play a vital role in supporting and developing new products and solutions that address climate and sustainability challenges. In support of these efforts, it is widely recognized that globally consistent standards, taxonomies, and practices will be critical as the industry and policymakers partner and guide their economies through the transition. Leveraging in-house expertise with a history of developing and enforcing standards and policies alongside exchanges and self-regulatory organizations, the CFTC’s CRU will ensure the agency remains a helpful participant in all relevant discussions.
In addition to undertaking research and engaging in ongoing market and stakeholder outreach, in support of the CFTC’s mission, the CRU may facilitate:
Through proactive engagement with the exchanges, clearinghouses, industry groups, and market participants, an active and ongoing dialogue regarding new and emerging risks related to climate change and the impact of extreme and increasingly frequent and severe weather events and how such climate-related market risks are being or ought to be addressed in a fair and equitable way.
A better and more complete understanding in the CFTC of the derivatives and related products being developed to address climate-related market risks and to facilitate the transition to a net-zero economy, and how such products fit within and interact with the CFTC’s regulatory and supervisory framework, including the identification of areas where refinements or modifications could be made either to the products or to the CFTC’s approaches.
Increased participation in domestic and international fora aimed at building consensus for consistent standards, taxonomies, disclosures, and practices across derivatives products and markets, as well as related clarity on regulatory, capital, and accounting standards.
Coordinated efforts to support the development of relevant and reliable climate-related market risk data resources.
Consideration and evaluation of whether tools such as climate finance labs or regulatory sandboxes would enhance development of climate-related market risk tools, products, and services.

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AFTER a successful first season a football academy scheme in Herefordshire is looking to recruit more players and coaches.
Cheltenham Town FC Development Centre Hereford are looking to expand and to add new teams in the under-nine, under-13, under-14 and under-16 age categories.

A statement from Cheltenham Town FC Development Centre Hereford said: “What a fantastic and successful first season for our Herefordshire centre.
“We have even managed to come through a national pandemic and still been able to get several of our youngsters progressing from the development centre to the main CTFC Academy throughout various ages.

“Some players have also had potential scholarship opportunities. We have also had players moving up age groups to better challenge themselves.
“Both our senior teams at under-18 and under-21 are in the top half and top in respective competitive leagues with exciting new pathway into the football pyramid to be announced.”
For more information or to register an interest email: ctfcdchereford@ctfc.

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There are investigations ongoing concerning the allegations against one of the world’s largest crypto exchanges, Binance. An American regulator, US Commodity Trading Futures Commission (CTFC), heads the investigation regarding some suspicious activities concerning American traders using the platform against the nation’s laid down regulations. Sources explained that the exchange is not registered with the body, making it illegal to support the alleged act.
The CTFC regulates the derivative industry within the country, making sure all derivative-related businesses follow regulations. The watchdog expresses its concerns over American traders’ support on the platform without informing the regulator of the incident. Many regulators within the American crypto space continue to make the industry safe for traders, but some wonder about the implication of the alleged regulation violation.
Binance might not face sanctions over alleged violation
Insiders explained that the US body has not accused the exchange of misconduct and that the accusations might not lead to sanctions by CTFC. The watchdog explained that cryptos are commodities, meaning that it has the power to regulate the asset, which also means that before the asset’s futures or derivatives are traded, exchanges must inform the sector’s regulator beforehand.

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There has been a supposed response from the firm’s CEO, Changpeng Zhao, who shared via a tweet that ‘it’s not a bull market without FUD.’ While no one can point out who or what, he was referring to, some claim that the entrepreneur talked about the allegations.
Historically, Binance is known to follow America’s regulations as it prevents the region’s residents from accessing its official website while creating an alternative that complies with US regulations. Traders know the site as Binance.US, and it is strictly for traders and investors based in the United States.
One of Binance’s executives, David Princay, refused to give details on the investigation news but assured that the firm would do something about it. It noticed that some US residents, who were non-US citizens, were accessing the Binance platform. The executive added that the firm was doing all it could to meet the region’s regulatory standards.
Regulators continue to face criticism
This allegation might have come at the wrong time as many US regulators face backlash from the citizens they hope to protect. Amongst crypto regulators within the region, SEC is known as the most controversial. Many people claim that the body lacks clear regulations and ‘often creates confusion’ within the digital asset space. What’s on many people’s minds when they hear SEC is the current legal battles the regulator is having with fintech firm Ripple.

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The watchdog sued Ripple for violating federal laws by not registering its cross-border token, XRPs, as securities. The firm raised numerous arguments, claiming that XRPs are not securities but cross-border payment tokens. SEC does not buy the argument as they both continue to face legal procedures to conclude the ongoing legal issues.
The watchdog has refused to say anything on the suit. Still, Ripple informed some months ago that the body refused the settlement, and its executives would likely face court proceedings regarding the issue.

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Binance CEO Changpeng Zhao
ANDREY RUDAKOV/Bloomberg/Getty ImagesCryptocurrency exchange Binance Holdings is being investigated by the Commodity Futures Trading Commission (CFTC) over concerns that it permitted US residents to trade derivatives, violating the agency’s regulations, Bloomberg first reported on Friday.
Binance, the world’s largest crypto exchange, is not registered with the CTFC to trade those types of securities. The agency counts cryptocurrencies such as bitcoin to be commodities and therefore oversees its futures and other derivatives.
The CTFC has yet to determine whether the cryptocurrency exchange did allow US residents to buy and sell derivatives. Thus far, Binance has not been accused of misconduct.
Binance, which was founded in China and has an office in Singapore, says it currently does not have a headquarters. For now, US residents are unable to access its website.

“We have always blocked US access, but users do find intelligent ways to get around our block sometimes and we just have to be smarter about the way we block,” company co-founder Changpeng Zhao told Bloomberg in November.
Zhao has, in the past, maintained that Binance complies with US laws. In 2019, Binance partnered with BAM Trading Services, which launched Binance.us in San Francisco. Binance licenses its matching engine and wallet technologies to Binance.us.
Still, many users find a workaround, especially amid the boom in bitcoin which has flirted with record highs on Thursday, breaching the $1 trillion market capitalization threshold. The founder told Bloomberg in a February television interview that his platform is attracting more than 300,000 user registrations a day, far surpassing its previous 2017 peak.
The heightened scrutiny against Binance and other crypto-related firms comes after lawmakers and watchdogs have raised their concerns about the rapidly evolving asset.
US Treasury Secretary Janet Yellen has publicly criticized bitcoin numerous times as well as ECB president Christine Lagarde.

In November last year, CFTC filed criminal charges accusing founders and executives of the BitMEX, a major cryptocurrency derivatives exchange of not taking sufficient steps to prevent money laundering.

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