CFTC is Doing SEC’s Real Job on Crypto According to XRP Decision

The U.S. Securities and Exchange Commission is leaving securities enforcement up to the CFTC when it comes to cryptocurrency. While the commission rushes ahead of Congress to write the entire federal crypto policy by lawsuit, the CFTC is going for more clear-cut violations.

The Commodity Futures Trading Commission took the lead late last week and filed charges of securities fraud against a cryptocurrency business in Florida. It filed the charges in the U.S. District Court for the Middle District of Florida.

CFTC Charges Florida Residents for Crypto Scam

The CFTC charged four individuals in three states and their unregistered entity “Fundsz” with allegations of securities fraud Friday:

“The complaint charges them with fraudulent solicitation from clients to purportedly trade in cryptocurrencies and precious metals.”

The commission’s Director of Enforcement, Ian McGinley, said:

“The CFTC continues to root out individuals who defraud customers in the cryptocurrency and precious metals markets.”

But the allegations faced by defendants in this case are actually within the purview of the SEC, according to the Howey test in the recent Ripple court case.

Commodity Futures Doing SEC’s Job

This case is kind of like what FTX founder Sam Bankman-Fried is in trouble for with the law. It’s not that they the defendants were selling Fugazi and claiming it’s Rolex. It’s that they were selling Rolex and claiming it’s a really great Fugazi.

But it’s not so great when people lose their money to something they thought was less risky during a 75% Bitcoin price plunge.

These are clear cut allegations of selling unregistered and unregulated securities. It’s the sort of thing the SEC could actually be effective at enforcing.

McGinley warns crypto investors seeking online brokerages and crypto exchanges:

“Though the products fraudsters purport to trade and their methods of attracting victims—in this case through social media—may have changed, the old adage ‘if something sounds too good to be true, it probably is’ remains as valid as ever.”

That advice is just as good for considering a rare baseball card purchase as a high flying stock buy.