Founder of Cryptocurrency Futures Platform Digitex Changes Plea to Guilty for Bank Secrecy Act Violations

News | May 24, 2024 By:

On Tuesday, May 7, 2024, the U.S. Attorney’s Office for the Southern District of Florida announced that the founder of cryptocurrency futures exchange Digitex Futures has pleaded guilty to violating the Bank Secrecy Act by failing to establish and implement an anti-money-laundering program.

Adam Colin Todd, the former CEO of Digitex Futures, originally pleaded not guilty in December to charges that he refused to implement policies designed to prevent money laundering on his cryptocurrency futures platform. However, Todd changed his plea to guilty on May 7 in Miami federal court.

U.S. Attorney Markenzy Lapointe stated that Todd publicly refused to implement know-your-customer (KYC) policies at Digitex Futures, which are designed to verify customer identities and screen for illegal activity like money laundering. As the exchange’s CEO, Todd illegally sold futures contracts to U.S. customers without following appropriate regulations.

In a signed agreement, Todd admitted to willfully violating the Bank Secrecy Act by failing to establish anti-money laundering programs and failing to provide information on countering terrorism financing. This carries a maximum sentence of 5 years in prison and a $250,000 fine, in addition to restitution. A date has not been set for Todd’s sentencing hearing.

According to the indictment, Digitex Futures allowed customers to trade cryptocurrencies and futures contracts from 2018 to 2022. The exchange covered costs by issuing its own cryptocurrency called DGTX instead of charging fees. However, Todd ignored the requirements to report suspicious transactions to regulators and did not implement proper KYC/anti-money laundering protocols.

The indictment alleges that Digitex Futures advertised that customers did not need to provide their real names when opening accounts. In 2020, Todd reinforced this in an article stating it was a “non-know-your-customer exchange.” Similar comments were made on the exchange’s YouTube channel.

Court filings also state that Todd enabled access to Digitex Futures via virtual private networks, aware this could help U.S. customers circumvent IP checks. In one case, Todd told an Illinois investor to use a VPN to conceal his identity when accessing the exchange’s website, and the investor then purchased $1.7 million worth of DGTX from 2019 to 2021.

Todd’s guilty plea brings an end to the legal proceedings and acknowledges his violation of U.S. anti-money laundering laws in operating an unregistered cryptocurrency futures exchange. He now faces prison time and fines for his role at Digitex Futures.