Cryptocurrencies, Trading Scams Draw Increased Federal Enforcement

Enforcement actions and fines by the federal derivatives-market regulator ticked up in the last fiscal year, buoyed by cryptocurrency cases, spoofing schemes and settlements dating back to the financial crisis.

The Commodity Futures Trading Commission reported taking significantly more enforcement actions in fiscal 2018, which ended Sept. 30 and is the first full fiscal year under Trump-appointed leadership.

The agency also levied approximately $900 million in civil monetary penalties, higher than the yearly amount in five of the eight years of the Obama administration. The increase follows a year-over-year decline in fiscal 2017, which some Democrats and consumer groups criticized.

“They’ve tried to clarify some of their emphases—we know that cryptocurrency fraud is an issue, manipulation, insider trading is an issue, and they’re very focused on spoofing,” said Gary DeWaal, special counsel at Katten Muchin Rosenman LLP and a former CFTC enforcement lawyer.

The increase is likely to contrast with the Securities and Exchange Commission’s fiscal-year numbers, which officials have played down ahead of their release. The SEC is the federal government’s other markets regulator. The two agencies police different parts of the financial markets, with some overlap on derivatives and other products.

CFTC Chairman J. Christopher Giancarlo trumpeted the commission’s enforcement numbers in a speech this week in Minneapolis. After offering a disclaimer that “you can’t get a complete picture of an enforcement program through quantitative metrics alone,” he argued that “by any measure, enforcement during this last year has been among the most vigorous in the history of the CFTC.” SEC officials have issued similar caveats about the limits of statistics in fully capturing the agency’s enforcement record.

Photo: Andrew Harrer/Bloomberg News