On 4 December 2024, the US Commodity Futures Trading Commission (US CFTC) announced the Enforcement action for fiscal year 2024, securing a US $17.1 billion in monetary relief. This includes US $2.6 billion in civil monetary penalties and US $14.5 billion in disgorgement and restitution, largely driven by cases in the digital asset sector. The US CFTC showed its aggressive pursuit of misconduct across traditional markets and digital assets markets, committing to protect market integrity and participants and to ensure the integrity of US markets through vigorous enforcement against misconduct across digital assets, environmental markets, and traditional commodities.
The US CFTC in fiscal year 2024 took several digital asset enforcement action. The agency secured a US $12.7 billion judgment against FTX and Alameda Research for fraudulent operations, which is the largest enforcement action in its history. Litigation continues against other defendants, including FTX co-founder Samuel Bankman-Fried. In another case, Binance, its founder Changpeng Zhao, and a former compliance officer were penalized over US $2.8 billion for operating an unregistered derivatives exchange and evading regulatory provisions.The US CFTC pursued fraud charges against Voyager Digital’s former CEO, with ongoing litigation following a federal court’s validation of the agency’s legal arguments.
The US CFTC entered new territory by filing its first fraud case in the voluntary carbon credit market. CQC Impact Investors LLC and its former executives were penalized US $1 million for submitting false data to inflate carbon credits. US CFTC’s growing oversight of emerging environmental markets and its intent to deter fraudulent practices in industries critical to combating climate change.
Market manipulation and deceptive practices were another focus of enforcement. The US CFTC imposed a US $55 million penalty on Trafigura Trading LLC for manipulating fuel oil benchmarks and a US $48 million penalty on TotalEnergies Trading SA for distorting gasoline benchmark prices in Europe. The US CFTC fined entities such as Raizen Energia SA and Aspire Commodities LLC for wash sales and exceeding federal position limits, imposing penalties of US $750,000 and US $800,000, respectively.
Protecting customers from fraudulent schemes remained a cornerstone of the US CFTC’s efforts. The agency prosecuted numerous cases, including a US $283 million Ponzi scheme perpetrated by The Traders Domain FX Ltd., which defrauded retail investors, and a US $161 million cattle-trading fraud affecting over 2,000 victims.
Compliance failures were met with stringent penalties. J.P. Morgan Securities LLC was fined US $200 million for failing to properly capture billions of trade orders in its surveillance systems, while The Toronto Dominion Bank faced a US $75 million penalty for deficiencies in its compliance with electronic communications. Additional fines included US $30 million against Canadian Imperial Bank of Commerce and US $4 million against Barclays Bank PLC for repeated failures to meet swap reporting standards.
Misuse of confidential information was another enforcement priority. Freepoint Commodities LLC paid US $91.5 million in penalties and disgorgement for using nonpublic information obtained from a South American entity to influence trades in fuel oil. The agency also pursued insider tipping schemes, to protect the integrity of US financial markets.
The US CFTC’s whistleblower program saw unprecedented success in FY 2024, receiving over 1,700 tips and awarding US $42 million to whistleblowers. These efforts led to enforcement actions recovering US $162 million.
To enhance its enforcement capabilities, the US CFTC established the Surveillance and Enforcement Data Analytics Office, combining market surveillance with advanced analytics to detect and investigate misconduct more effectively. The agency also bolstered its collaboration with federal, state, and international regulators, achieving significant outcomes through joint actions, including a US $68 million fraud case targeting elderly investors.
US CFTC Chairman Rostin Behnam stated: The CFTC remains steadfast in its duties to protect customers and vigorously oversee CFTC-regulated markets critical to the health of the U.S. economy, misconduct in our jurisdictional markets is rarely confined, especially as these boundaries are continually being redefined by disruptive technology. I commend our Division of Enforcement for remaining thoughtful and agile in its response to evolving markets and a growing pool of participants. Their dedication to holding accountable those who violate the Commodity Exchange Act is invaluable to the American public.” He added: “Our actions in FY 2024 reflect our commitment to holding recidivist actors accountable, obtaining meaningful monetary relief and sanctions, and implementing robust remediation measures,” said Director of Enforcement Ian McGinley. “This was a year of large-scale, complex cases and settlements in both our traditional markets and in areas of increasing importance, such as voluntary carbon markets. We are committed to prioritizing strong, effective, and focused enforcement to deter future misconduct. I thank our division staff for their unwavering dedication this year; with their expertise and professionalism they are staunch defenders of our markets.”
(Source: https://www.cftc.gov/PressRoom/PressReleases/9011-24, https://www.cftc.gov/media/11596/DOE_ResultsFY24_AddendumA120424/download)
