CFTC chairman Rostin Behman announces additional members to his leadership team

January 25, 2022

Washington, D.C. — Commodity Futures Trading Commission Chairman Rostin Behnam today announced the following leadership appointments as he begins his chairmanship. The personnel announced today will lead divisions, offices and other teams within the CFTC to execute the responsibilities in the CFTC governing statute and other issues facing the agency. Today’s announcement follows Chairman Behnam announcing his executive office staff and naming Tanisha Cole Edmonds as the CFTC’s first Chief Diversity Officer. Chairman Behnam plans to make additional staff and policy announcements very soon.

“These individuals have decades of experience with the Commodity Exchange Act and our governing regulations, bringing unmatched expertise to their roles,” said Chairman Behnam. “I am grateful to each for their service, and I am confident that they will strive every day to fulfill the agency’s mission and ensure our markets work for all.”

Amanda Olear, Market Participants Division Director

Amanda Olear has been appointed the Director of the Market Participants Division. In her role, she is responsible for the oversight of swap dealers, futures commission merchants, introducing brokers, commodity pool operators, commodity trading advisors, and their associated persons, and she has been working in an acting capacity for this past year. Previously, she served as Deputy Director for Registration and Compliance since 2018. Ms. Olear joined the CFTC in 2007 from Council, Baradel, Kosmerl & Nolan, P.A. in Annapolis, Maryland, where she focused on business entity formation and complex commercial litigation. Prior to that, Ms. Olear served as a law clerk to the Honorable Lynne A. Battaglia on the Maryland Court of Appeals. Coming from a long line of family farmers, she holds a JD, with honors, from the University of Maryland Francis King Carey School of Law and a BA, summa cum laude, from McDaniel College.

Rob Schwartz, General Counsel

Rob Schwartz has been named General Counsel of the Commodity Futures Trading Commission. In his role, Mr. Schwartz will lead the Legal Division and serve as chief legal advisor to the Commission. A 10-year veteran of the CFTC, Mr. Schwartz has been the agency’s Acting General Counsel since January 2021. Since joining the CFTC in 2011, Mr. Schwartz has served primarily as the CFTC’s chief litigator, in the position of Deputy General Counsel for Litigation, Enforcement and Adjudication. He has successfully represented the CFTC in numerous critically significant cases, including several lawsuits challenging the agency’s implementation of the Dodd-Frank Act, many appeals in enforcement actions, and bankruptcies of registered entities. Mr. Schwartz joined the CFTC from private practice where he represented businesses and individuals in enforcement actions and investigations by the Securities and Exchange Commission, the Public Company Accounting Oversight Board and other government agencies, as well as in private civil actions at all levels of the federal judicial system covering a broad range of business issues. Prior to that, Mr. Schwartz served as a law clerk to the Honorable Amalya L. Kearse of the U.S. Court of Appeals for the Second Circuit. Mr. Schwartz holds a JD, magna cum laude, from New York University School of Law and a BA in Political Science from Tufts University.

Clark Hutchison, Clearing and Risk Division Director

Clark Hutchison will continue his role as the Director of the Division of Clearing and Risk (DCR), which he has led since July 2019. In his role, Mr. Hutchison manages a team of 90 employees at the CFTC’s Washington, D.C., New York and Chicago offices that are responsible for the agency’s supervision of derivatives clearinghouses and their members, including oversight of clearing processes through risk assessment and surveillance. Prior to joining the CFTC, Mr. Hutchison spent more than three decades in top positions in large global financial institutions, where he specialized in clearing and risk management. In addition to his private sector experience, Mr. Hutchison has served as a special advisor to the board of directors of the Futures Industry Association, as a member of the Chicago Mercantile Exchange’s Risk Committee, and as a member of the board of directors of NASDAQ Futures, Inc. Mr. Hutchison received a BA from Haverford College.

Tamara Roust, Data Division Director and Chief Data Officer

Dr. Tamara Roust will continue as the Director of the Division of Data and Chief Data Officer, a role she has had since October 2020. In her role, she is responsible for overseeing the agency’s enterprise data strategy and data governance approaches, including cloud migration, automation and artificial intelligence efforts and compliance with the Federal Data Strategy. Prior to rejoining the CFTC, Dr. Roust served as Chief Data Officer for the State of Illinois where she developed the state’s enterprise data strategy and was a part of the state’s COVID-19 taskforce. As part of that effort, she developed automated solutions for transferring data from 1970s era IBM DB2 systems to cloud-native systems for contact tracing, so that hundreds of local health departments could connect to data stored within the state’s systems. From 2011-2016, Dr. Roust served as a Risk Analyst in the CFTC’s Division of Clearing and Risk (DCR), and from 2016-2019, as an Associate Director within DCR’s Examinations Branch, where she revised 39.18 and 39.36 regulations to improve information security at Derivatives Clearing Organizations (DCOs). She also has nearly a decade of experience in the financial services industry, holds several industry credentials, and worked as a senior engineer for NASA’s Jet Propulsion Laboratory. Dr. Roust holds several graduate degrees including a PhD in Management Information Systems from Claremont Graduate University and a BA in Mathematics and Computer Science from the University of California, Los Angeles. Most recently, she earned a certificate in Machine Learning from Stanford.

Suyash G. Paliwal, International Affairs Office Director

Suyash G. Paliwal will continue as Director of the Office of International Affairs (OIA) at the Commodity Futures Trading Commission. In his role, Mr. Paliwal advises the CFTC Chairman on cross-border issues and leads the CFTC’s international regulatory initiatives. OIA represents the Commission in international fora such as the International Organization of Securities Commissions (IOSCO), IOSCO’s joint work with the Committee on Payments and Market Infrastructures (CPMI), and the Financial Action Task Force (FATF), and advises the Chairman on matters relating to the Financial Stability Board (FSB) and IOSCO’s Financial Stability Engagement Group (FSEG). Prior to joining the CFTC, Mr. Paliwal served at the Federal Reserve Board, where he advised on FSB matters, represented the central bank in the International Association of Insurance Supervisors and bilateral forums, developed international and domestic policy for the supervision of systemically important financial institutions and certain financial conglomerates (insurance savings and loan holding companies), and oversaw the supervision of large financial institutions. He led a team of supervisors in Europe and Asia to develop international standards on governance and risk management, advised Federal Reserve Board leadership on strategic international engagement and market developments, and was lead author of a proposed capital rule. Prior to his government service, Mr. Paliwal worked in private practice at White & Case and Allen & Overy, where he advised clients on complex international legal issues and derivatives regulations. Before entering law school, he worked in the financial services industry at Ernst & Young and Verisk Analytics, Inc. He holds a JD from Columbia Law School (2010), an MBA, University of Pennsylvania and a BS, University of Pennsylvania.

Source: Commodities Futures Trading Commission

CFTC commissioner Dawn Stump addresses regulating binary options trading platforms under old rules….

January 13, 2022

“I want to thank the Chamber of Digital Commerce for inviting me to speak today.  Before beginning, I want to provide the standard disclaimer that the views I express today are my own and not necessarily those of the Commission I am proud to serve upon.

Do any of you have a theme song?  I have several that describe various milestones in my life, and as I reflect on my time at the CFTC, I’m leaning towards I Can Do Hard Things by Jennifer Nettles.[1]  As the song goes, “Sometimes I don’t like it, but that don’t mean I don’t love it.”  I do love my job—not in spite of, but because of, the challenging matters that we tackle (often in the face of difficult circumstances well beyond our comfort zones).

That’s where I would like to start—getting out of our comfort zones and doing hard things.  This is front of mind for me in light of the incredible innovations we are seeing these days in terms of the structure, products, and services being offered in financial markets.  Many—but by no means all—of these innovations arise from developments in financial technology such as the growth of digital assets and decentralized finance (or DeFi).

As financial markets evolve and adapt to new demands, market regulators must not stifle beneficial innovations by clinging rigidly to regulatory approaches of the past that may no longer be fit for purpose.  But by the same token, infrastructure providers who offer the market access to new, innovative services must not dismiss the fact that they may be required to seek and comply with regulatory oversight in order to assure market integrity and customer protection.  It’s time to thoughtfully consider the hard things we all must do to get comfortable with current realities.

So there, I have acknowledged the obvious, but why is this so hard?  Achieving the benefits of innovation in the context of market regulation is tougher than it sounds because we are not starting with a clean slate.  Take, for example, the U.S. derivatives markets regulated by the Commodity Futures Trading Commission.  These markets have, for some time, been characterized by futures and swaps contracts with varying degrees of execution and clearing occurring on centralized venues through intermediaries responsible for brokering and guaranteeing such transactions predominantly for institutional clients.  Recently, though, the pace of technological development and increasing retail interest in these markets is driving new business models that rely less on the traditional centralization of institutional participation via intermediaries, and rather propose to fulfil these functions in a more decentralized way.

These new market innovations are increasingly presenting novel issues that require comprehensive thinking by those of us at the CFTC who regulate the derivatives markets.  I believe that our current approach of relying primarily on enforcement actions to impose penalties on those with novel products and markets for their failure to register with the agency is simply an insufficient response.  I agree that many of the entities in question should be registered with the CFTC for oversight purposes, as we are tasked by Congress to regulate the infrastructure that permits access to swaps and futures—and many of these entities are, in fact, performing that function.  However, we must acknowledge that the infrastructure we oversee is rapidly changing—and our current regulatory regime was not designed to fit the types of services that are evolving to meet the market’s demands.

So, what’s a regulator to do—continue to take enforcement actions against companies that develop products and business models that are outside-the-box, all the while knowing that our existing rules governing the registration and regulation of the traditional market infrastructure are ill-suited to the very thing that has driven their development (i.e. an expansion in the types of participants seeking access to these products and markets, and their preference for less intermediation)?  Certainly, that is the easiest answer: “It’s not our job to tell you how to meet our rules, just figure it out.”  Wait, what?  How do we expect these companies to conform to a system that does not recognize their value add, the demands of their customers, or even perhaps the future of these markets?  What is the goal—to shut down these services, or to encourage those who deliver these services to do so under proper oversight?

I certainly hope it’s the latter.  After all, it is innovation that provides solutions to meet new market demands.  Congress has established a principles-based regime with flexibility to permit adaptation to innovation in the derivatives markets.  And welcoming innovation in those markets historically has been at the heart of what we do at the CFTC.

I believe it is thus incumbent upon the CFTC to bridge the gap between its enforcement and oversight functions by setting more clearly defined regulatory expectations for new, innovative applications in the derivatives market infrastructure.  That is a much taller task as compared to simply enforcing rules on the books beyond their original context.  It’s a tough job—but it is our job—and I am confident in our ability to do hard things.  We cannot be mere bystanders to the fundamental market changes taking place before our eyes, nor should we abdicate the responsibility Congress has given us to “promote responsible innovation and fair competition.”[2]

Adaptation by market regulators, however, should not be viewed by participants as a means to escape regulation.  Quite the contrary, our adaptation to innovation is necessitated by the responsible oversight we owe the marketplace.  As these matters continue to land on the CFTC’s enforcement docket, it is urgent that we provide direction to those who seek to comply with the law.  And then, armed with more clearly defined expectations, the CFTC can better identify those truly bad actors who seek evasion of the rules—and who deserve the full force of robust enforcement action.

In an attempt to start a helpful conversation, I have below identified a non-exhaustive list of areas in which our current rulebook governing infrastructure may require adapting to account for various new innovations taking shape in response to current market demands:

Trading Platforms (Designated Contract Markets and Swap Execution Facilities):  In its recent enforcement action against Polymarket,[3] the CFTC found that an online trading platform offering event-based binary options failed to register as a designated contract market (DCM) or swap execution facility (SEF).  To operate its markets, Polymarket deploys smart contracts, which are hosted on a blockchain.  This was a matter of first impression for the CFTC with respect to a blockchain-based trading platform.  Yet, despite this fundamental difference from the traditional DCM/SEF infrastructure for which the CFTC’s rules were written, the CFTC has not given any public consideration to how such a platform seeking to register as a DCM or SEF would be expected to operate under its existing rules.  

The term “DeFi” is often used to describe some of the protocols relevant in this framework, and some argue DeFi can exist without regulatory oversight—a topic I will leave for another day.  But in a broader sense, I believe that DeFi is spurring innovative functionalities by market infrastructure providers that may improve efficiencies for those seeking the benefit of centralized liquidity (a feature of more traditional and regulated derivatives markets). The really hard thing that requires our attention is this: How do we achieve our regulatory objectives in a manner that still enables infrastructure providers, and their customers, to benefit from these innovations?

Clearinghouses (Derivatives Clearing Organizations):  Beyond trading, difficult questions persist relative to central clearing, which is a key tenet of addressing counterparty credit risks in derivatives markets.  Our clearing rules are designed around a structure where intermediaries stand between clients and clearinghouses as guarantors, and where clients (often institutional) use leverage to increase their exposure.  But we are lately seeing many new retail-focused derivatives clearing organizations (DCOs) that do not use an intermediary model.

To date, we have accommodated this model by imposing conditions such as requiring products to be fully collateralized.  But as we begin to see requests from DCOs to offer leveraged clearing to retail market participants, we would be well-served to clearly define regulatory expectations before enforcing the application of ill-suited rules.  And we must do so in a transparent way in order to fairly encourage competition.  We are well aware that there is a need for such engagement to maintain the safety and soundness of DCOs while at the same time encouraging retail access to the clearing infrastructure.  It’s a difficult task, but we can do hard things.

Brokers and Counterparties (Futures Commission Merchants):  In its recent enforcement action against Kraken,[4] the CFTC found that an online exchange enabling customers to engage in “retail commodity transactions” in digital assets such as Bitcoin operated as an unregistered futures commission merchant (FCM) with respect to those transactions.  This finding begs the question:  If Kraken had sought to register as an FCM, how would it have been expected to operate?  The CFTC has never comprehensively addressed how retail commodity transactions are to be regulated, and many of the CFTC’s rules for traditional FCMs do not fit Kraken’s role as an exchange.[5]  As a result, we are now obligated, in my view, to explain the regulatory parameters such transactions and such non-traditional FCMs are expected to meet—yet, another hard thing the CFTC must tackle.

In conclusion, the key takeaway is that we are at a crossroads that requires everyone to roll up their sleeves and do hard things.  Derivatives infrastructure providers must recognize that while their business models may be novel, they do not operate outside of the regulatory oversight required by U.S. law under the Commodity Exchange Act.  And for its part, the CFTC must urgently consider fine-tuning its rulebook (often a hard and tedious task), because responding to technological developments and ongoing market dynamics primarily through enforcement is neither good for the marketplace nor sustainable for the agency.  We all benefit from clearly defined regulatory expectations that promote compliance and strong enforcement focused on those who blatantly disregard such expectations to the detriment of your markets.” — Dawn Stump

[1] Jennifer Nettles, “I Can Do Hard Things,” I Can Do Hard Things EP (Big Machine Records, LLC 2019).

[2] Section 3(b) of the Commodity Exchange Act, 7 U.S.C. § 5(b) (emphasis added).

[3] In re Blockratize, Inc. d/b/a Polymarket, CFTC Docket No. 22-09 (January 3, 2022).

[4] In re Payward Ventures, Inc. (d/b/a Kraken), CFTC Docket No. 21-20 (September 28, 2021).

[5] See Concurring Statement of Commissioner Dawn D. Stump Regarding Enforcement Action Against Payward Ventures, Inc. (d/b/a Kraken) (September 28, 2021), available at  See also Concurring Statement by Commissioner Dawn D. Stump Regarding Tether and Bitfinex Settlement (October 15, 2021), available at

CFTC enforcement action: binary options exchange

Enforcement actions

January 03, 2022

Washington, D.C. — The Commodity Futures Trading Commission today entered an order filing and simultaneously settling charges against Delaware-registered Blockratize, Inc. d/b/a Polymarket, based in New York City,for offering off-exchange event-based binary options contracts and failure to obtain designation as a designated contract market (DCM) or registration as a swap execution facility (SEF).

The order requires that Polymarket pay a $1.4 million civil monetary penalty, facilitate the resolution (i.e. wind down) of all markets displayed on that do not comply with the Commodity Exchange Act (CEA) and applicable CFTC regulations, and cease and desist from violating the CEA and CFTC regulations, as charged.

“All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space,” said Acting Director of Enforcement Vincent McGonagle. “Market participants should proactively engage with the CFTC to ensure that our markets remain robust, transparent, and afford customers the protection provided under the CEA and our regulations.”

Case Background

The order finds that, beginning in approximately June 2020, Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as “event markets.” According to the order, through its  website, Polymarket offered the public the opportunity to “bet on your beliefs” by buying and selling binary options contracts related to an event taking place in the future that are susceptible to a “yes” or “no” resolution, such as: “Will $ETH (Ethereum) be above $2,500 on July 22?”; “Will the 7-day average COVID-19 case count in the U.S. be less than 15,000 for the day of July 22”; “Will Trump win the 2020 presidential election?”.  The order further finds that Polymarket has offered more than 900 separate event markets since its inception, while deploying smart contracts hosted on a blockchain to operate the markets. Polymarket creates, defines, hosts, and resolves the trading and execution of contracts for the event-based binary option markets offered on its website. 

According to the order, such event market contracts, each of which is composed of a pair of binary options, constitute swaps under the CFTC’s jurisdiction, and therefore can only be offered on a registered exchange in accordance with the CEA and CFTC regulations.

As stated in the order, the CFTC recognizes Polymarket’s substantial cooperation with the Division of Enforcement’s investigation of this matter in the form of a reduced civil monetary penalty.

The Division of Enforcement staff members responsible for this case are Nina Ruvinsky, Joseph Platt, Heather Dasso, Allison Passman, Scott Williamson, and Robert Howell. Staff from the Division of Market Oversight, Market Participants Division, Division of Clearing and Risk, and LabCFTC assisted in this matter.

CFTC’s Advisory to Avoid Unregistered Binary Options Trading Platforms

The CFTC has issued several customer advisory protection warnings, including Avoid Unregistered Binary Options Trading Platforms and Beware of Off-Exchange Binary Options Trades, which advise customers that there are registered binary options exchanges in the U.S. The CFTC strongly urges the public to verify a company’s registration with the CFTC before committing funds. Registration means the exchange meets specific regulatory requirements for liquidity, safety and customer protection that are enforced by the CFTC or the U.S. Securities Exchange Commission. 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 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), file a tip or complaint online or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.

Source: Commodity Futures Trading Commission

The problem with regulating cryptocurrency. Like any currency, it is speech. Why regulate its movement?

Currency is more than just paper authorized by the government to be put in circulation around a country. Currency says something about the value of the issuer. A currency tells its holder that the issuer brings to the market a level of economic value. That value is captured in the goods the issuer produces. The value is reflected in the laws that protect the markets within which the products are bought and sold. Currency communicates a message as to how well its underlying economy is doing and the prices paid for currency reflect how well these messages are received by other countries and potential holders.

Currency is speech …

The United States, by law, puts restraints on its government by a constitutional requirement that its Congress make no law “abridging the freedom of speech.” Article 19 of the United Nation’s Universal Declaration of Human Rights provides that:

“Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers.”

And I would argue that currency is such a medium for conveying information and ideas. As discussed prior, it conveys information, thoughts, ideas about its underlying economy. Its use tells us that someone has decided to use it as a store of wealth, as a unit of account, and is willing to use it as a medium of exchange for the aforementioned reasons.

Cryptocurrency does the same thing that the paper currency we are used to does. Rather than an analog-based paper currency, crypto is digital created and transmitted or exchanged digitally. The information it conveys is written in encrypted code. Unlike paper currency, cryptocurrency is not yet accepted as ready for prime time even though recent moves by individuals e.g., Elon Musk tweeting support for bitcoin and Dogecoin; corporations e.g., Subway accepting bitcoin as payment for sandwiches; and investment banks, e.g., Goldman Sachs starting a bitcoin trading desk, indicate investors are warming to the idea of cryptocurrency as a store of value or even a medium of account.

It is taking a little longer for the public to see bitcoin as a medium of exchange. The general public has to get its head around the idea that a sandwich can be bought with bitcoin or services rendered can be compensated with Ethereum. When it comes to mainstream use as a medium of exchange, the speech we are hearing is more like the babbling of an 18-month old, but we are reminded that the leap from toddler chat to adult yak and the move from cowry shells to paper currency was eventually made.

In the meantime, I believe that proponents should head off increased regulation of cryptocurrency by making the argument to regulators such as the Commodity Futures Trading Commission, the Securities and Exchange Commission, and the U.S. Treasury with the speech argument for starters. Individuals should be able to convey how they value their wealth by being able to finance and trade cryptocurrency. Currency is merely a medium and just like the American broadcast and communications systems have abandoned analog and have embraced digital for its flexibility and data capacity, so too should the American public by embracing crypto as a way to express wealth, value, and economy.

How the regulator’s mindset may impact cryptocurrency …

An article today in Bloomberg discussing how a Biden administration would address the regulation of cryptocurrency has me putting myself in the place of the regulator. What is the U.S. Securities and Exchange Commission’s world view of digital assets? How will the Commodity Futures Trading Commission’s view toward regulation of exchanges evolve? Will the Board of Governors of the Federal Reserve System view the payment system aspect of cryptocurrency as a threat to the current national and global payment system regime or as a welcome supplement that brings more efficiency and transparency?

Clarity on what may happen on the regulatory side of cryptocurrency requires that the trader first take a top-down view of how governments view the world and especially how they view markets. You will never hear a regulator utter the term “free markets.” That phrase is best suited for the rhetoric of politicians who inherit worn out campaign slogans and reboot them for the latest run for office. I doubt they themselves, a significant number of whom are not trained in economics, truly understand what a market is or can likely identify threats to it. Compound markets for digital assets with the mechanics of payment systems and the politician’s eyes glaze over and she falls back to what she knows best: sloganeering tainted with tropes that appeal to individualism, consumerism, collectivism, or whatever narrative they believe their constituency will buy into.

The professional regulator, on the other hand, uses law and regulatory code as a front or an excuse. Statutes and codes give the professional regulator cover for their underlying philosophy and narrative. Unlike the elected official who only spends minutes on issues of markets and their regulation, the professional regulator is the expert spending years developing her own philosophy and transitive narrative and reconciling that philosophy and narrative with at times archaic statutes that the elected official has dumped on her to interpret. With archaic statutes and codes as cover for the regulator, it is the trader’s task not only to generate returns from holding a digital asset but to best understand what that regulator’s philosophy is.

There are two types of regulator. One I term as the myopic regulator. This regulator focuses on the black letter of the law and the code. Their focus is primarily on whether the market participants are following the rules on the books. He does not take into consideration any wider view of the philosophy behind markets and regulation. If the rules are skewed more to trader protection, his interest will be in outcomes that favor trader protection. If the rules skew more toward brokerage or platform protection, the regulator’s interest will be in outcomes favoring platform protection.

On the other side is what I term the universal regulator. They have managed to synthesize the role of government, traders, and platforms. They have an interest in maintaining the viability of the market system. Government’s role, in their view, is to provide for an efficient and productive trading post where there is sufficient transparency between traders and where the exchange platform ensures speed, efficiency, and clarity of trade because without these characteristics, the American markets as a whole become less viable, less reliable. Government will expand or contract in order to meet its universal role.

The trader should be mindful of this regulatory environment, particularly the tug-of-war between more or less regulation of exchanges. Eventually the trader pays the price in terms of transparency, price fairness, and the level of fees, especially where trade is her primary means of livelihood and income. After all, trade boils down to an information game and staying informed on government actions as well as on how government itself can disrupt information flow is important to the trader’s success.

As of 4:07 am AST, the price of Ether and Bitcoin per various currencies …

BTC/USD=23080.3 ETH/USD=614.193 
BTC/EUR=18,907.8 ETH/EUR=503.158 
BTC/JPY=2,388,500 ETH/JPY=63,560.7 
BTC/CNH=150,898 ETH/CNH=4,015.67 
BTC/DKK=140,642 ETH/DKK=3,742.65 
BTC/CHF=20,477.7 ETH/CHF=544.935 
BTC/GBP=17,232 ETH/GBP=458.564 

Source: OANDA

Legal/Political news impacting cybercurrencies

How not to treat forex traders: CFTC wins order of restitution against Winston Reed Investments

December 22, 2020

Washington, D.C. — The Commodity Futures Trading Commission today announced that Judge Max O. Cogburn Jr., of the U.S. District Court for the Western District of North Carolina, entered a consent order against Mark N. Pyatt, of North Carolina,imposing a permanent injunction and ordering Pyatt to make restitution in the amount of $255,850. The order also permanently bans Pyatt from registering with the CFTC and from trading commodity futures and retail foreign exchange contracts (forex). In the order, Pyatt admitted to fraudulently soliciting individuals to place funds in a commodity pool and to misappropriating most of the funds he solicited.

The consent order resolves a CFTC case against Pyatt that was filed in the Western District of North Carolina on February 10, 2020. [See CFTC Press Release No. 8120-20] The CFTC’s litigation continues against Pyatt’s company, Winston Reed Investments LLC.

The consent order finds that from at least April 2017 to February 2019, Pyatt accepted $276,850 from pool participants to trade commodity futures and forex. The consent order also finds that Pyatt misappropriated most of pool participants’ funds for business expenses and personal use, and to make Ponzi-like payments to other pool participants, while using only a fraction of the funds to trade. In addition, despite overall net trading losses, Pyatt sent reports to investors claiming profits of between 18.8 percent to 86.5 percent per month.

Related Criminal Action

In a parallel criminal action, the U.S. Attorney for the Western District of North Carolina announced that Pyatt pleaded guilty to wire fraud in connection with the scheme. On October 27, 2020, Pyatt was sentenced to 37 months in federal prison and ordered to pay restitution to his victims. [See United States v. Mark Nicholas Pyatt, Case No. 1:20-cr-00016, ECF No. 42 (W.D.N.C. Nov. 5, 2020)]

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 the wrongdoers are held accountable.

The CFTC appreciates the cooperation and assistance of the U.S. Attorney’s Office for the Western District of North Carolina in this matter.

The Division of Enforcement staff members responsible for this case are Michael Loconte, James A. Garcia, Erica Bodin, and Rick Glaser.

* * * * * *

CFTC’s Foreign Currency (Forex) Fraud Advisory

The CFTC has issued several customer protection fraud advisories, including the Forex Fraud Advisory, which provides information about a type of fraud involving the trading of foreign currencies and how customers can detect, avoid, and report these scams.

Customers 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.

Source: Commodity Futures Trading Commission

As of 12:12 pm AST, Bitcoin & Ether continue their climb …

BTC/USD=23,243.40 ETH/USD=623.883

BTC/EUR=19,040.60 ETH/USD=511.073

BTC/JPY=2,404,680 ETH/JPY=64,544.60

BTC/CNH=151,935 ETH/CNH=4,078.12

BTC/DKK=141,646 ETH/DKK=3,801.95

BTC/CHF=20,604 ETH/CHF=553.038

BTC/GBP=17,408.20 ETH/GBP=467.258

Source: OANDA

Legal/Political news impacting crypto markets

CFTC releases guide on position limits rule for exchange-traded futures contracts

Washington, D.C. — The Commodity Futures Trading Commission’s Division of Market Oversight (DMO) today released a staff workbook to provide guidance to market participants on which exchange-traded futures contracts would be subject to the position limits rule the Commission approved in October. [See CFTC Press Release No. 8287-20]

“DMO is providing this workbook to market participants to promote transparent regulation of the derivatives markets,” said DMO Director Dorothy DeWitt. “DMO staff has worked extensively with our exchanges to identify the right set of contracts that are referenced futures contracts under our new position limits rule.”

The staff workbook provides a list of the core referenced futures contracts, along with a non-exhaustive list of linked referenced contracts (i.e., cash-settled futures contracts and options on futures contracts that are linked to a core referenced futures contract), that would be subject to federal position limits in connection with the position limits final rule.  

Source: Commodity Futures Trading Commission

As of 1:08 pm AST, this is how BTC and ETH are faring in the cryptocurrency markets

BTC/USD = 22,599.70 ETH/USD = 648.854

BTC/EUR = 18,463.40 ETH/EUR = 530.098

BTC/JPY = 2,331,500 ETH/JPY = 66,939.10

BTC/CNH = 147,150 ETH/CNH = 4,224.79

BTC/DKK= 137,367 ETH/DKK = 3,943.93

BTC/CHF =19,980.40 ETH/CHF = 573.653

Source: OANDA

Regulatory/Legal News Impacting Cryptocurrency Trade

December 18, 2020

Washington, D.C. —The Commodity Futures Trading Commission today announced that Jaime L. Klima, the CFTC’s Chief of Staff and Chief Operating Officer, will depart the agency for a role in the private sector next month. Ms. Klima has served in her executive leadership role since joining the agency in July 2019, where in addition to being the lead advisor to Chairman and Chief Executive Heath P. Tarbert on legal, policy, and administrative matters, she has been responsible for managing the daily operations of the agency and overseeing its nearly 1,000 personnel.

“Jaime is a Team Tarbert original, having been with my office from the very beginning of my tenure at the CFTC. From our historic rulemaking and enforcement agenda to our efforts to enhance the agency’s culture and operational effectiveness, she’s been instrumental to every one of our many successes,” said Chairman Tarbert. “I couldn’t have picked a better person, manager, or attorney to help me lead this agency, and I’m confident she’ll excel in her future endeavors.”

“My time at the CFTC has been more rewarding than I could have imagined,” said Ms. Klima. “The pandemic made this year challenging, to say the least, but I’m incredibly proud of how the agency has risen to the occasion. Notwithstanding those headwinds, Chairman Tarbert’s strategic leadership has led us to tremendous success, and I’m grateful to have been a member of the team. I also thank the Commissioners and the agency staff for being such exceptional colleagues.” 

Prior to joining the CFTC in 2019, Ms. Klima spent seven years serving in a variety of senior legal and policy roles at the U.S. Securities and Exchange Commission, most recently as Chief Counsel to SEC Chairman Jay Clayton. She also spent nearly a decade working in private practice on legal and regulatory compliance matters for clients in the financial services sector. Ms. Klima holds a bachelor’s degree from the University of Virginia and earned her master’s and juris doctor degrees from Duke University.

Source: Commodity Futures Trading Commission