Digitex Founder Pleads Guilty to Failure to Implement Anti-Money Laundering Program
The U.S. Attorney's Office for the Southern District of Florida announced Tuesday that Todd pleaded guilty to "willfully causing Digitex to violate" the Bank Secrecy Act. It is known that the authorities had previously charged the former CEO in February.
According to the indictment, Todd played an active role in operating an unregulated futures platform serving U.S. clients from 2018 to 2022. During this period, it failed to fulfill its obligation to implement and maintain AML (Anti-Money Laundering) and KYC (Know Your Customer) programs. It is also alleged that Todd flatly refused to enforce KYC policies for Digitex Futures.
In 2020, after a major data leak at Digitex that exposed confidential user data, Todd announced that all KYC checks were discontinued. Although the platform had previously stated that US IPs were blocked and users would have to confirm that they were not located in the US, Todd made this decision willingly.
BASE. Todd’s guilty plea could potentially result in up to five years in prison and a $250,000 fine, according to the Attorney’s Office. Sentencing will be determined by a federal district court judge who will consider the U.S. Sentencing Guidelines and other relevant factors.
Former Binance CEO Changpeng Zhao faced similar charges in a different federal district and pleaded guilty in November 2023, receiving a four-month prison sentence in April.
Although an exact date for Todd’s sentencing hearing has not been set, his LinkedIn profile indicates that he will step down as CEO of Digitex Futures Exchange in October 2022.
Todd’s indictment follows a series of legal actions following a default judgment issued by the Commodity Futures Trading Commission (CFTC) seven months ago.
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 he controls, including Digitex Futures Exchange. This decision stemmed from 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 designated as a contract market, failing to register with the CFTC, and failing to implement customer information programs, Know Your Customer (KYC) procedures, and Anti-Money Laundering (AML) procedures.
The court’s order prohibited Todd and his companies from registering with the CFTC and trading on any market regulated by the CFTC. Additionally, the court ordered Todd to repay $3.9 million in ill-gotten gains and pay a civil penalty of $11.7 million, effectively concluding the CFTC’s enforcement action against the organizations.
