The U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit in the Eastern District of New York against former Deutsche Bank investment banker Rashawn Russell.
The filing alleges that Russell duped retail investors into putting money into digital asset exchange-traded funds. He is also accused of misappropriating nearly $1 million from investors and wire fraud during the transaction.
according to Press release, Russell is asking retail investors to contribute Bitcoin, ETH and fiat currencies between November 2020 and July 2022 to invest in what he claims is a proprietary digital asset exchange-traded fund. He guarantees that investors will not bear any losses. In some cases, the banker also promised a minimum return on investment of 25%.
The Complaint alleges that Russell knowingly and/or recklessly made false and misleading statements about the fund’s structure, size and performance. He also allegedly made false promises to pay withdrawal requests and pay USDC investors.
The money was then used to pay Russell’s personal expenses, gambling-related establishments, and Ponzi-style payments to existing investors.
In this case, the Commodity Regulatory Authority required returns, dissolution, civil penalties, trading injunctions, and permanent registration, in addition to permanent injunctions for other violations of the Commodity Exchange Act (CEA) and CFTC regulation.
CFTC Director of Enforcement Ian McGinley said:
“As today’s actions demonstrate, the CFTC has been relentless in blaming the bad guys and protecting retail investors from fraud in the digital asset space.”
SEC and CFTC disagree
The U.S. Securities and Exchange Commission (SEC) firmly recognizes certain cryptocurrencies as securities. In contrast, the CFTC has maintained that Bitcoin and ETH are commodities in its latest cryptocurrency fraud and embezzlement lawsuit.
“Certain digital assets, such as Bitcoin, ETH, and USDC, are included in the definition of “commodities” pursuant to section 1a(9) of the Act at 7 USC §1a(9), and their contractual sale is prohibited by the Act Section 6(c)(1), 7 USC § 9(1) and Regulation 180.1, 17 CFR § 180.1 (2022)”.
The statement comes a month after CFTC Chairman Rostin Behnam said ETH and stablecoins should be considered commodities, in stark contrast to SEC Chairman Gary Gensler, who said all digital assets except Bitcoin have It may be that the securities are thus regulated by the authorities under his command.
The lawsuit also highlights an ongoing conflict of opinion between the two institutions, leading regulators including the Federal Reserve, the Office of the Comptroller of the Currency and insurance companies to question what an asset class is U.S. federal deposits?
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According to CryptoPotato