- CFTC files a lawsuit against ex-Deutsche Bank investment banker for defrauding investors of nearly $1 million in a digital asset trading fund.
- CFTC reinforces that Bitcoin and Ether are commodities while the SEC has been adamant about certain crypto assets being securities.
The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against former Deutsche Bank investment banker, Rashawn Russell, for fraudulently soliciting retail investors to invest in a digital asset trading fund.
The CFTC is accusing Russell of defrauding investors of almost $1 million during this process. The filing alleges that Russell guaranteed investors that they would not sustain any losses and promised a minimum 25% return on investment.
Fraudulent activity
Russell solicited retail investors to contribute Bitcoin, Ether, and fiat currency to invest in his purported proprietary digital assets trading fund from November 2020 through July 2022. The funds were then used to pay for Russell’s personal expenses, entities tied to gambling activities, as well as Ponzi-like payments to current investors.
The CFTC is seeking restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.
As today’s action demonstrates, the CFTC is unrelenting in holding bad actors accountable and protecting retail investors from fraud in the digital asset space.
CFTC’s stance on crypto assets
The CFTC has reinforced that Bitcoin and Ether are commodities in the latest crypto fraud and misappropriation lawsuit. In contrast, the United States Securities and Exchange Commission has been adamant about certain crypto assets being securities. The assertion by the CFTC comes a month after CFTC Chair Rostin Behnam stated that Ether and stablecoins should be treated as commodities, a different view from that of SEC Chair Gary Gensler.
Gensler has previously claimed that every crypto-asset with the exception of Bitcoin is likely a security and is subject to his agency’s oversight. The lawsuit has highlighted the continued lack of consensus between the two agencies that leaves open the question of how regulators such as the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation view the asset class.
CFTC is protecting investors in the digital asset space
CFTC’s Director of Enforcement Ian McGinley stated that the CFTC is unrelenting in holding bad actors accountable and protecting retail investors from fraud in the digital asset space. The CFTC’s action reinforces the importance of investors being aware of the risks involved in investing in digital assets and doing their own research before investing.
The CFTC’s lawsuit is an example of how the US regulatory landscape continues to evolve as it tries to adapt to the growing digital asset industry. It is expected that more such cases will surface as the industry matures and regulators continue to increase their oversight.
In summary, the CFTC has filed a lawsuit against former Deutsche Bank investment banker, Rashawn Russell, for fraudulently soliciting retail investors to invest in a digital asset trading fund. The lawsuit highlights the continued lack of consensus between the CFTC and SEC on how to classify crypto assets.
The CFTC is unrelenting in holding bad actors accountable and protecting retail investors from fraud in the digital asset space. This lawsuit reinforces the importance of investors being aware of the risks involved in investing in digital assets and doing their own research before investing.
