CFTC Charges Four Unregistered Entities for Offering Illegal Commodity Trading Services

The Commodity Futures Trading Commission (CFTC) has filed charges against four entities for failing to register as required futures commission merchants (FCMs), while falsely claiming to be regulated by the CFTC.

The four entities - cryptoiminerstrade.com, Expert Stocks Zone, FalconForexBot, and swiftminingexpert.com - are alleged to be offering illegal binary options trading services based on the values of commodities like foreign currencies and cryptocurrencies, including Bitcoin.

Each of the entities claims to be "one of the leading platforms in the U.S. offering binary options, Forex and spreads," and touts its ability to securely handle customer funds. However, the CFTC alleges that none of the entities are properly registered as required by law.

"The CFTC strongly urges the public to verify a company's CFTC registration before committing funds," the agency said in its announcement. "If an entity is unregistered, a customer should be wary of providing funds to that entity."

The CFTC complaints seek to force the four entities to cease their illegal operations and stop committing further violations of the Commodity Exchange Act and CFTC regulations.

However, the enforcement action was not without dissent. CFTC Commissioner Summer K. Mersinger issued a dissenting statement, arguing that the agency lacked sufficient evidence to support the unregistered FCM charges against the entities.

"While I support acting to stop entities from falsely claiming that they are registered with the Commission, I cannot support the unregistered FCM charges in this sweep without additional evidence," Mersinger said.

Mersinger contended that the CFTC must apply a higher level of scrutiny before employing administrative proceedings, as required by the recent Supreme Court decision in SEC v. Jarkesy. She argued that the evidence presented did not clearly demonstrate the entities were actually acting as FCMs, which have distinct legal requirements.

Commissioner Caroline D. Pham also released a scathing dissenting statement, criticizing the CFTC's decision to bring these enforcement actions through administrative proceedings rather than federal courts.

"It is unbelievable that in the wake of the U.S. Supreme Court's Jarkesy opinion and the heightened scrutiny of agency administrative proceedings, the Commission is doubling down on bringing enforcement actions before a hearing officer—not even an Administrative Law Judge," Pham said.

Pham argued that the CFTC is using these administrative proceedings to advance "novel interpretations" of the FCM definition and registration requirements, all while "evading public scrutiny or oversight by the courts."

This enforcement action is the latest in the CFTC's ongoing efforts to crack down on unregistered and fraudulent commodity trading services, particularly those involving emerging digital assets like cryptocurrencies. The agency has ramped up its scrutiny of this space in recent years, imposing over $1.2 billion in civil penalties on 27 financial institutions for related violations since December 2021.

By charging these four entities for failing to properly register, the CFTC aims to protect consumers from potentially deceptive and high-risk trading platforms operating outside the regulatory framework. The agency is urging the public to exercise caution and verify a company's registration status before entrusting it with any funds or engaging in commodity trading activities.

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