CFTC sues Cash FX, alleges $950M crypto-linked forex scheme

The Commodity Futures Trading Commission sued Cash FX Group and three individuals, alleging the defendants solicited over $950 million for a foreign-exchange investment program linked to cryptocurrency and operated it as a multilevel-marketing Ponzi scheme. The agency filed the complaint in the U.S. District Court for the Middle District of Florida, naming Cash FX and its CEO Huascar Jose Lopez Castillo of Brazil, The Conversion Pros and its CEO Ronald Pope of Oregon, and Justin Halladay of Florida.

According to the CFTC, the defendants represented that participant funds would be traded in retail foreign exchange contracts within a commodity pool managed by expert traders, proprietary algorithms and artificial intelligence, and they promised returns as high as 15% weekly. The complaint alleges those statements were false and that Cash FX engaged in minimal actual forex trading while misappropriating most participant funds.

The CFTC further alleges the scheme used new participant contributions to pay fictitious trading profits and that millions of dollars were directed to each defendant. The agency says Cash FX provided participants with false accounting statements and that investors suffered at least $406 million in losses as a result of the conduct.

David I. Miller, director of the CFTC's Division of Enforcement, said the action reflects the commission's emphasis on protecting the public from fraud and manipulation. The filing comes amid broader regulatory attention to crypto markets; Cointelegraph previously reported the CFTC submitted a new regulatory action covering crypto asset transactions to the White House for review following the Senate's failure to advance the CLARITY Act.