The Commodities Futures Trading Commission (CFTC) raised a record $17.1 billion in monetary penalties this year, its largest end-of-year recovery yet.
That marks a massive increase from last year’s $4.3 billion in combined penalties. However, the CFTC pursued considerably fewer cases this year – 58 compared to last year’s 96.
The 2024 total includes $2.6 billion in penalties and $14.5 billion in disgorgement and restitution, a figure comprising the $12.7 billion judgment against FTX and the $2.7 billion judgment against Binance. Various cases are still in litigation.
To put those figures into perspective, the SEC, which has a budget several times larger than the CFTC, garnered $8.2 billion in penalties across 583 actions this fiscal year.
Data and misconduct
This year also saw the creation of the CFTC’s Surveillance and Enforcement Data Analytics Office, which optimized the agency’s ability to analyze complex data and detect misconduct. You can read the agency’s full report here.
“Our actions in [fiscal] 2024 reflect our commitment to holding recidivist actors accountable, obtaining meaningful monetary relief and sanctions, and implementing robust remediation measures,” said Ian McGinley, director of enforcement at the CFTC.
Enforcement highlights include:
- Digital asset misconduct: The CFTC secured landmark settlements against crypto exchanges FTX/Alameda Research, Binance, and Voyager, recovering billions in restitution and penalties. It also brought cases against decentralized finance entities and fraud schemes within the crypto space.
- Market manipulation and fraud: The CFTC addressed fraudulent activities in traditional markets such as gasoline, fuel oil, and agricultural commodities, which included assessing major monetary penalties against Trafigura and TotalEnergies for market manipulation. The agency also brought its first fraud case involving voluntary carbon credits (VCCs), intangible assets whose value correlates to carbon offset initiatives.
- Recordkeeping, surveillance and oversight: Major financial institutions like JP Morgan, Barclays, and TD faced hundreds of millions in penalties for recordkeeping violations and deficient surveillance controls.
- Whistleblower awards: The CFTC’s Whistleblower Program saw 1,700 tips lead to a record number of awards totaling over $42m. The program was credited with helping the CFTC obtain over $162m in monetary relief this year.
Enforcement breakdown by primary violation:
- Fraud/failure to register: 11.
- Reporting and recordkeeping violations: 11.
- Manipulation, false reporting, spoofing: 5.
- Registered entity violations: 4.
- Trade practice violations (such as wash trading): 6.
- Illegal off-exchange contracts/failures to register: 9.
- Statutory disqualification: 4.
- Misappropriation of non-public information: 3.
- Supervisory failures: 5.
- Total: 58
GRIP comment
The establishment of the Data Analytics Office and the major penalties leveraged against crypto exchanges demonstrate the CFTC’s evolving capacity to tackle complex intangible commodities misconduct, and issue whopping penalties to match.
And with the commodities market expanding as investors pile on to cryptocurrencies and other intangible assets such as carbon credits, the agency has aptly demonstrated its ability to catch up with the times.
In the coming years, the CFTC is likely to receive additional enforcement clarity as a result of bipartisan legislation that will define “decentralized” cryptocurrencies as commodities. But expanded efforts will likely overlap with the incoming Trump administration’s energetic enthusiasm for deregulation.
But with the agency’s still relatively small budget request of $399m for the next fiscal year, we will see if it will be able to keep up enforcement the in the coming years.
