Digitex Founder Admits Failure in Implementing Anti-Money Laundering Program
In a statement released on Tuesday, the U.S. Attorney’s Office for the Southern District of Florida announced that former Digitex CEO Adam Todd has pleaded guilty to intentionally causing the company to violate the Bank Secrecy Act. It is worth mentioning that Todd was indicted by authorities in February.
The indictment reveals that Todd played an active role in running an unregulated futures trading platform that catered to U.S. customers from 2018 to 2022. During this time, he failed to establish and maintain proper Anti-Money Laundering (AML) and Know Your Customer (KYC) programs. Furthermore, Todd publicly refused to implement KYC policies for Digitex Futures.
In 2020, after a significant data breach at Digitex exposed confidential user data, Todd decided to discontinue all KYC checks. Despite earlier claims that U.S. IPs were blocked and users had to confirm their non-U.S. location, Todd willingly made this choice.
The U.S. Attorney’s Office states that Todd’s guilty plea could result in a maximum sentence of five years in prison and a fine of $250,000. The final sentencing will be determined by a federal district court judge, who will consider the U.S. Sentencing Guidelines and other relevant factors.
It is worth noting that former Binance CEO Changpeng Zhao faced similar charges in a different federal district and pleaded guilty in November 2023. He received a four-month prison sentence in April.
While the date for Todd’s sentencing hearing has not been confirmed, his LinkedIn profile indicates that he resigned as CEO of Digitex Futures Exchange in October 2022.
Adam Todd Faces Legal Actions, Including Default Judgment by CFTC
Todd’s indictment comes after a series of legal actions against him, including a default judgment issued by the Commodities Futures Trading Commission (CFTC) seven months prior.
In July 2023, Judge Roy Altman of the U.S. District Court for the Southern District of Florida granted a permanent injunction against Todd and four companies under his control, including Digitex Futures Exchange. This injunction was a result of allegations that Todd attempted to manipulate the price of the platform’s native token, DGTX, using a computerized bot.
The charges against Todd and his companies included offering futures transactions on a platform not authorized as a contract market, failure to register with the CFTC, and neglecting to implement customer information programs, KYC procedures, and AML procedures.
As per the court’s order, Todd and his firms are prohibited from registering with the CFTC and trading in any CFTC-regulated markets. Additionally, Todd has been ordered to pay a $3.9 million disgorgement and a $11.7 million civil monetary penalty, effectively resolving the CFTC’s enforcement action against the entities.
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