CFTC says Cash FX traded less than 1% of the $950 million it raised

Fifteen percent a week, compounded for a year, turns each dollar into about $1,433 ^[1]. By the CFTC's account, Cash FX made almost no attempt to earn it. The agency says less than 1% of incoming funds went into actual market activity ^[7]. Less than 1% of more than $950 million is under $9.5 million ^[2], spread over a solicitation period that ran from at least June 2019 to December 2023 ^[4].

Most of the rest went in a loop. If you take the $406 million in losses away from the $950 million raised, roughly $544 million is left to account for ^[3]. According to the complaint, that covers the recycled payments that gave some participants their principal back and whatever the operators kept ^[10][11].

The pitch was that skilled professionals, proprietary algorithms and artificial intelligence traded the pool ^[5]. The CFTC calls those representations false ^[7]. Neither report describes the AI claim as a standalone violation. The AI line fails on the same evidence as the line about skilled professionals: the trading record ^[7]. The legal failures the agency adds are that Cash FX never registered as a commodity pool operator and that it mixed participant assets with the operators' own accounts ^[13].

The American slice is small. More than 6,000 of the 400,000-plus funded accounts belonged to US residents, who put in at least $27 million ^[9]. That is about 1.5% of the accounts ^[5] and 2.8% of the money ^[4]. The firm is based in Panama and its chief executive is from Brazil ^[3]. The Conversion Pros and Pope are accused of handling the conversions and payments that kept the scheme running, and Halladay of promoting it ^[12].

The defendants have not answered, and nothing has been proven ^[16], so the facts may still be fought over. Suppose the CFTC wins the injunction, restitution, disgorgement and penalties it is asking for ^[15]. It could then collect by tracing the offshore wallets, and Crowdfund Insider noted that crypto payment channels make tracing harder ^[19]. Or it could collect from the Oregon and Florida defendants. I think the second route matters more to the case than the $950 million headline suggests, because those are the defendants who live inside US jurisdiction ^[3]. A large recovery traced from the wallets Lopez allegedly controlled would prove that wrong ^[11].

"The Division of Enforcement has continued to refocus on its core mission of protecting the public from fraud and manipulation," Director of Enforcement David I. Miller said ^[14]. The agency has also sent a separate crypto rulemaking to the White House for review ^[17]. This complaint does not depend on that rule. It describes a forex pool that was never registered and barely traded, with investor money arriving through crypto wallets ^{[1][7][11][13]}.