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CFTC sues Cash FX in crypto-linked case

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CFTC sues Cash FX in crypto-linked case

The Commodity Futures Trading Commission said it is suing Cash FX Group and three individuals in a $950 million foreign-exchange investment case involving 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 said its complaint was filed Friday in the US District Court for the Middle District of Florida. It alleges the defendants operated a multilevel marketing Ponzi scheme, soliciting and accepting over $950 million for the purported purpose of trading retail foreign currency contracts in a commodity pool. 

The agency alleged the defendants falsely claimed pool funds were handled by expert traders, proprietary algorithms and artificial intelligence, and promised up to 15% weekly returns.

The CFTC alleged that Cash FX engaged in minimal forex trading and misappropriated most of the participant funds, using new contributions from participants to pay fictitious trading profits while directing millions of dollars to each defendant.

Related: Bernstein expects ‘aggressive’ rulemaking from SEC, CFTC, following CLARITY Act failure

Cash FX also provided false accounting statements to participants, who lost at least $406 million, the CFTC alleged. 

“The Division of Enforcement has continued to refocus on its core mission of protecting the public from fraud and manipulation,” said Director of Enforcement David I. Miller. “This critical action, and the massive fraud it targets, reflects our steadfast commitment to addressing fraud wherever we find it.”

Cointelegraph reported Sept. 18 that the CFTC had submitted a new regulatory action covering crypto asset transactions and markets for White House review, as the agency moves forward with its approach to overseeing the digital asset sector.

While details of the planned regulations were not disclosed, the submission came days after the Senate failed to advance the CLARITY Act, legislation aimed at establishing a federal regulatory framework for crypto markets.

Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.

Tether says it had ‘limited’ exposure to bank linked to $84M US seizure

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Tether says it had ‘limited’ exposure to bank linked to $84M US seizure

US prosecutors alleged that a payments business illegally transferred hundreds of millions of dollars at the direction of EQIBank, where Tether holds some assets.

Ex-CFTC Leader to Leave Blockchain Association after CLARITY Vote Fails

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Ex-CFTC Leader to Leave Blockchain Association after CLARITY Vote Fails

Summer Mersinger, formerly a commissioner with the US Commodity Futures Trading Commission (CFTC), will step down as CEO of the Blockchain Association and leave the advocacy organization at year’s end after one of the group’s legislative priorities faced a significant setback in Congress.

On Friday, the Blockchain Association (BA) announced that Mersinger would step down as CEO on Oct. 16, when the group’s former chief executive, Kristin Smith, would return to lead the organization as interim CEO. Mersinger joined the Blockchain Association in June 2025 after leaving the CFTC three years before her second term as a commissioner was scheduled to end.

“I came here from the CFTC because I believed this industry deserved clear rules of the road and a credible, unified voice making the case for them in Washington,” said Mersinger on her departure from the BA.

The organization cited Mersinger’s efforts to advance the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, as well as helping to provide “regulatory clarity at the [Securities and Exchange Commission] and CFTC.” 

Notably, the organization did not mention the Digital Asset Market Clarity Act under consideration in the Senate, which the BA repeatedly pushed lawmakers to support. The bill failed to gain enough votes from Democrats and Republicans in a cloture motion earlier this month, which many experts expect will leave the legislation in limbo until 2027.

The Blockchain Association did not immediately respond to questions about Mersinger’s plans for 2027.

Related: CFTC issues warning over risky prediction market ‘mention’ contracts

Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.

OG.com Joins US Push for Single-Stock Perpetual Futures

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OG.com Joins US Push for Single-Stock Perpetual Futures

OG.com Markets is seeking US regulatory approval to offer perpetual futures tied to individual stocks, as trading platforms push to bring the popular derivatives product to US equity markets.

In a Thursday filing with the Commodity Futures Trading Commission (CFTC), OG.com proposed new rules allowing it to list cash-settled single-stock futures that never expire and can trade 24 hours a day, five days a week.

OG.com was recently spun out of crypto exchange Crypto.com as an independent prediction markets and derivatives platform valued at $5 billion. At the time, CEO Kris Marszalek said the platform planned to expand beyond prediction markets into futures and perpetual contracts.

Shortly after the spin-off, Robinhood took an equity stake in OG.com as part of a multi-year deal to use its CFTC-regulated derivatives exchange and clearinghouse for prediction markets.

Unlike traditional futures contracts, perpetual futures, or “perps,” have no expiration date, allowing traders to maintain exposure without periodically rolling into new contracts. The product was pioneered in crypto by BitMEX in 2016.

Related: President Trump’s media company to terminate Crypto.com deal

Perpetual futures push expands into US stocks

Crypto trading platforms and prediction markets are increasingly looking to bring one of the digital asset market’s most popular derivatives products to US stocks, with OG.com joining a growing group seeking regulatory approval.

On Sept. 18, Coinbase, Kraken parent Payward through its Bitnomial exchange, and prediction market Kalshi all filed to offer perpetual futures tied to individual US stocks.

The filings came after US regulators, including the Securities and Exchange Commission (SEC) and CFTC, pushed ahead with crypto initiatives despite the CLARITY Act failing to advance in the Senate on Sept. 15.

Source: Paul Atkins

Just days after the vote, the SEC cleared limited onchain trading of tokenized US stocks under its Innovation Exemption, while the CFTC expanded regulatory relief for software providers connecting users to regulated derivatives platforms, including those offering perpetual contracts.

The CFTC had already begun laying the regulatory groundwork for perpetual futures months earlier.

In May, the agency established a case-by-case review process for perpetual contracts and approved Kalshi’s Bitcoin perpetual futures product, followed in June by temporary relief allowing certain registered exchanges to convert existing crypto futures into contracts without expiration dates.

Magazine: Exchanges reporting crypto gains to IRS becomes tax nightmare

CFTC Updates Guidance on Tokenized Assets, Blockchain Records after Failed Vote

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CFTC Updates Guidance on Tokenized Assets, Blockchain Records after Failed Vote

Cointelegraph is committed to providing independent, high-quality journalism across the crypto, blockchain, AI, and fintech industries.

All news, reviews, and analyses are produced with full journalistic independence and integrity. For more details on our standards and processes, please read our Editorial Policy.

Fed Sets Out Stablecoin Rules Under GENIUS Act

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Fed Sets Out Stablecoin Rules Under GENIUS Act

The Federal Reserve has proposed capital, redemption and other regulatory requirements for stablecoin issuers under its supervision as it moves to implement the GENIUS Act.

The GENIUS Act already requires stablecoin issuers to maintain reserves backing their tokens on a one-to-one basis and limits the types of assets they can hold, including cash, bank deposits and short-term US Treasurys. The law left federal regulators to establish more detailed capital, reserve-diversification and risk-management requirements.

Under the Fed proposal, issuers would face an operational-risk capital charge equal to 2% of the first $20 billion in stablecoins outstanding, 1.5% of the next $30 billion and 1% of amounts above $50 billion, along with additional capital requirements tied to credit and operational risks.

Issuers would generally be required to process redemptions within two business days. If reserves fall below the required one-to-one backing, an issuer would have to notify the Fed and either restore its reserves under a remediation plan or liquidate them and redeem outstanding stablecoins.

Issuers would also have to publish monthly reports detailing their outstanding stablecoins and the value and composition of their reserves. The disclosures would have to be examined by a registered public accounting firm and certified by the issuer’s CEO and CFO.

A separate proposal would establish an application process for Fed-supervised banks seeking approval to issue payment stablecoins through subsidiaries, including requirements to submit a business plan and financial information.

The proposals are open for public comment for 60 days after publication in the Federal Register.

Related: EU banking watchdog calls for crypto lending rules under MiCA

Barr says stablecoins must remain redeemable during market stress

Fed Governor Michael Barr supported the proposal on Thursday but said further work would be required for stablecoins to become reliable payment instruments.

“Stablecoins will only be stable if they can be reliably and promptly redeemed at par in a range of conditions. This includes during market stress, when pressure can be put on the value of even otherwise liquid government debt, and during episodes of strain on the individual issuer or its related entities,” Barr said.

Barr added that he was encouraged by the proposed limits on reserve assets and standardized capital requirements, while calling for public feedback on whether the framework adequately addresses interest-rate and foreign-currency risks.

He also said universal redemption rights should be clearly established in the final rule and raised concerns about a standard that would prevent the Fed from taking supervisory or enforcement action over an anti-money laundering deficiency unless the issue is considered “significant or systemic.”

The GENIUS Act is set to take effect on Jan. 18, 2027, or 120 days after federal regulators issue final implementing rules, whichever comes first.

Magazine: Winners and losers of the SEC’s new tokenized stocks rules

US Lawmakers from Gaming States Urge SCOTUS to Take up Kalshi Case

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US Lawmakers from Gaming States Urge SCOTUS to Take up Kalshi Case

A group of US state lawmakers has filed an amicus brief with the US Supreme Court, urging justices to weigh in on a case between prediction markets platform Kalshi and gaming authorities. 

On Tuesday, the National Council of Legislators from Gaming States (NCLGS) filed in the US Supreme Court, supporting New Jersey’s Attorney General and gaming authorities’ petition for a writ of certiorari. The petition, filed on Sept. 2, asked the nation’s highest court to consider New Jersey’s case against Kalshi, potentially resolving whether state authorities or federal agencies have jurisdiction over prediction market companies.

In its amicus curiae filing supporting New Jersey’s position, the NCLGS argued that a ruling favoring Kalshi would “[render] states powerless” to regulate sports betting on prediction markets, causing “substantial harm and confusion.” According to the group, “gaming-related matters” should be left to individual US state authorities, though the filing did not address the competing argument that event contracts traded on federally regulated markets fall under the CFTC’s exclusive jurisdiction.

“If Kalshi’s self-described ‘sports betting’ activities are deemed beyond state regulation, then casinos, pari-mutuel operators, and other heavily regulated entities are certain to amend their business and products to seek the same status,” said state lawmakers. “Entire state regulatory regimes surrounding this vice activity will have to be reconsidered in light of any preemption found in this area.”

The Supreme Court petition, filed by New Jersey authorities as part of an appeal following a decision from the US Court of Appeals for the Third Circuit, has not received an official response from Kalshi. The company has until Nov. 9 to file a brief stating its position in the case, but a spokesperson told Cointelegraph after the initial filing that it could not be “regulated by 50 different regulators.“

Related: Kalshi joins Coinbase with own filing for US stock perpetual futures

Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently.

New York sues Polymarket over alleged illegal gambling business

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New York sues Polymarket over alleged illegal gambling business

The action filed by state lawmakers followed a similar lawsuit against prediction markets company Kalshi in July that alleged the platform was running an illegal gambling operation.

EU Banking Watchdog Calls for Crypto Lending Rules Under MiCA

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EU Banking Watchdog Calls for Crypto Lending Rules Under MiCA

Cointelegraph is committed to providing independent, high-quality journalism across the crypto, blockchain, AI, and fintech industries.

All news, reviews, and analyses are produced with full journalistic independence and integrity. For more details on our standards and processes, please read our Editorial Policy.

Bitget Moves Institutional Collateral Off Exchange With Sygnum

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Bitget Moves Institutional Collateral Off Exchange With Sygnum

Bitget is giving institutional traders the option to trade on its exchange without keeping the underlying collateral there, the latest sign that crypto markets are adopting a clearer separation between custody and execution.

The exchange has integrated Sygnum Protect, an off-exchange custody platform operated by Swiss-regulated Sygnum Bank. Institutional clients can keep collateral in segregated, bankruptcy-remote custody at Sygnum while a corresponding balance is mirrored to Bitget for spot and derivatives trading. Sygnum Protect

The arrangement does not mean Bitget is moving all customer assets off its balance sheet. It provides an additional custody route for institutional clients that want access to Bitget’s liquidity without maintaining the pledged collateral directly on the exchange.

Bitget is currently ranked fifth among crypto derivatives exchanges by CoinMarketCap, with $4.36 billion in open interest and $9.34 billion in 24-hour derivatives volume at the latest reading. Bitget serves more than 125 million users across 150 markets.

Haruko Attack Highlights a Changing Security Problem

The timing is notable after a cyberattack on London-based institutional crypto infrastructure provider Haruko affected 15 clients.

The attackers gained access to exchange API information and trading data. Some funds were also lost, with smaller hedge funds lacking stronger controls among those affected.

The incident reflects a broader shift in crypto security.

TRM Labs recorded 207 hacks during the first half of 2026, resulting in $972 million of losses. Infrastructure and operational compromises represented just 15% of incidents but accounted for 76% of the value stolen, as attackers targeted credentials, private keys and signing infrastructure rather than only smart-contract code.

Off-exchange custody does not eliminate those risks. But it reduces the amount of trading collateral directly exposed to the failure, insolvency or compromise of an exchange.

What Is Sygnum Protect?

Sygnum Protect lets institutions pledge assets held at the bank and use mirrored balances for trading on connected crypto exchanges.

Client crypto assets and securities can remain off Sygnum’s balance sheet under its Swiss banking structure. Protect also supports collateral including Bitcoin, Ether, stablecoins and yield-bearing instruments such as US Treasuries.

Sygnum launched its off-exchange custody offering with Binance in 2024 and subsequently expanded the network. By September 2025, after integrating Bybit, Sygnum said exchanges connected to Protect already represented more than 50% of global annual spot and derivatives trading volume.

Adoption has also increased sharply. Assets held through Protect grew 900% during 2025 and exceeded $1 billion by March 2026.

“Security and trust are the foundation of institutional adoption, and off-exchange custody now sits at the heart of both,” Bitget CEO Gracy Chen said in a statement shared with AlexaBlockchain.

“Working with Sygnum, our institutional clients can tap Bitget’s liquidity and product depth while their assets stay off our balance sheet, held with a regulated Swiss bank,” Chen added.

Exchanges and Custodians Race to Separate Trading From Assets

Sygnum is competing in a growing market for infrastructure designed to let institutions trade without permanently parking capital on exchanges.

Copper’s ClearLoop uses segregated custody while allowing clients to trade on connected venues. In July, the network processed 45 million trades representing $74.8 billion in notional volume and $2 billion in gross settlements.

BitGo’s Go Network follows a similar model. Assets allocated for trading remain in BitGo’s regulated custody until settlement, limiting the amount of capital directly exposed to participating exchanges. OKX and Gate US are among the venues that have moved to integrate with the network this year.

Binance has developed its own Banking Triparty structure. It said in June that the service had seven banking partners, while an integration with Anchorage Digital allows institutional clients to keep assets in segregated qualified custody while trading on Binance.

The common objective is to address a weakness exposed repeatedly by crypto market failures: trading firms historically had to transfer large pools of capital to an exchange before they could access its liquidity.

That model is becoming less necessary.

The competitive question for institutional traders is not only which exchange offers the best liquidity and execution. It is also where collateral sits, which legal regime protects it, how quickly it can be moved and what happens to those assets if a trading platform fails.

Bitget’s Sygnum integration is another step toward a market structure in which the exchange executes the trade, but does not necessarily hold the assets backing it.

Read Also: This is the First U.S.-Chartered Depository Bank to Offer Stablecoin Invoicing

Disclaimer: The information provided on AlexaBlockchain is for informational purposes only and does not constitute financial advice. Read complete disclaimer here.

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