The Commodity Futures Trading Commission (CFTC) has warned that while it’s doing all it can to end crypto fraud, it admitted that there’s nothing it can do about all the illicit activity out there, and thus there’s likely to be things here and there that vanish from its radar or go unnoticed.
The CFTC Doesn’t Have that Much Power
Christy Goldsmith Romero – one of five commissioners at the CFTC – announced in a recent interview that crypto cases account for roughly 20 percent (one fifth) of all the fraud cases the organization is overseeing. Among the present items it’s looking at include civil cases against both Binance and FTX, which are (or were) major digital trading platforms. She said:
There’s just a lot of fraud in the space. There’s no way we can police all the fraud, but we’ve got to do something.
She also mentioned that she takes serious issue with the idea that the CFTC is somehow considered lighter or “friendlier” than its rival the Securities and Exchange Commission (SEC), which is presently run by head Gary Gensler. Over the past several months, the SEC has been more involved in policing crypto activity. Not long ago, the agency went after Kraken and Coinbase.
In the case of the former, the company was forced to end all its staking activities and part with a $30 million penalty fee. With the latter, a Wells notice was sent to executives, informing them that formal charges were likely on their way. The executives took serious issue with these threats because they allegedly met with representatives of the SEC many times over a nine-year period to ensure the company was fully compliant.
Nevertheless, Romero doesn’t want to be seen as the easier of the two agencies. She said:
I don’t like the idea that somehow the CFTC is light touch. ‘Light touch regulator’ would never be written on my tombstone.
Right now, the CFTC is suing Binance – one of the largest and most popular crypto exchanges in the world – because it allegedly violated the Commodity Exchange Act. CFTC chair Rostin Behnam claimed:
For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of U.S. law.
So Many Types of Fraud
Crypto fraud has taken on many forms in recent years. One of the most common (and more modern) forms has been romance scams, which usually involve people chasing down others looking for love online.
Once they narrow in on a victim and garner their trust, they get them to invest in a phony crypto platform that’s controlled by their malicious brethren. They then block them from making withdrawals.