CFTC Sues Cash FX Over Alleged $950 Million Crypto-Linked Forex Scheme

The Commodity Futures Trading Commission is suing Cash FX Group and three individuals over a $950 million foreign-exchange investment scheme tied to cryptocurrency. The defendants are Cash FX and its CEO Huascar Jose Lopez Castillo of Brazil, The Conversion Pros and its CEO Ronald Pope of Oregon, and Justin Halladay of Florida. The CFTC filed its complaint Friday in the US District Court for the Middle District of Florida, alleging a multilevel marketing Ponzi scheme that solicited and accepted more than $950 million for supposedly trading retail foreign currency contracts in a commodity pool.

False Claims of AI Trading and High Returns

The agency alleges the defendants falsely claimed the pooled funds were managed by expert traders, proprietary algorithms and artificial intelligence, while promising weekly returns of up to 15%. The CFTC says Cash FX did little actual forex trading and instead misappropriated most participant funds, using new contributions to pay fictitious trading profits while funneling millions of dollars to each defendant.

Participants Lost at Least $406 Million

The CFTC alleges Cash FX also gave participants false accounting statements, and that they lost at least $406 million as a result. David I. Miller, the CFTC’s Director of Enforcement, said the agency has refocused on protecting the public from fraud and manipulation, calling this case part of its steady commitment to pursuing fraud wherever it is found.

CFTC’s Broader Crypto Regulatory Push

The lawsuit comes as the CFTC works on its wider approach to crypto oversight. On Sept. 18, it was reported that the agency submitted a new regulatory proposal covering crypto asset transactions and markets for White House review, days after the Senate failed to advance the CLARITY Act, a bill meant to set up a federal framework for crypto markets.