CFTC targets fraud after prioritising enforcement shift

Under acting Chair Caroline Pham, the U.S. Commodity Futures Trading Commission (CFTC) announced a consent order charging a New York resident with fraud in one of the agency’s first crypto-related enforcement actions after announcing a shift in enforcement priorities.

The action comes after Pham announced on Feb. 4 that the CFTC would restructure its Division of Enforcement’s priorities to focus on fraud.

The commission plans to divide responsibilities for enforcement cases into two task forces focused on retail fraud and “complex fraud and manipulation.”

The CFTC charged Rashawn Russell with engaging in a digital assets trading scheme from 2020 to 2022, soliciting investors to contribute cryptocurrency to a fraudulent fund.

According to the complaint, Russell misappropriated roughly $1.5 million through the scheme and plead guilty to wire fraud in the U.S. District Court for the Eastern District of New York.

The order requires Russell to pay over $1.5 million in restitution to defrauded victims.

“Russell guaranteed no loss to investors, and in some instances, guaranteed a minimum twenty-five percent return,” the CFTC’s complaint, filed on Jan. 16.

The CFTC is also cracking down on other crypto fraud schemes such as wash trading, pump and dump schemes, Ponzi (CRYPTO:PONZI) schemes, and pig butchering.

The enforcement case follows Acting CFTC Chair Pham’s Feb. 4 announcement regarding the commission’s shift in priorities, suggesting that the CFTC would focus less on regulating by enforcement for crypto firms handling digital assets considered commodities.

During the 2024 fiscal year under Rostin Behnam, the CFTC reported more than $17 billion in monetary relief, stemming mainly from the agency’s actions against crypto exchange FTX (CRYPTO:FTT).

In January, the U.S. Securities and Exchange Commission (SEC) announced it would form a crypto task force to develop a regulatory framework.

Trump appointed SEC Commissioner Mark Uyeda as acting chair following the departure of Gary Gensler until the U.S. Senate can consider the nomination of former commissioner Paul Atkins.