On June 28, the U.S. Commodity Futures Trading Commission (CFTC) Announce Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York issued default judgment against Alliance, Ohio resident Michael Ackerman for a permanent injunction.

Ackman is now barred from trading in any CFTC-regulated market and from registering with the CFTC. In addition to these limitations, the judgment ordered Ackman to pay $27 million in damages to victims of his fraudulent digital asset trading scheme. Additionally, Ackman was forced to pay a $27 million civil penalty as a significant financial consequence of his participation in the deceptive scheme.

Ackman is accused of running a fraudulent scheme to solicit funds from individuals and entities under false pretenses. However, he is accused of not using the funds for their intended purpose, but misappropriating a substantial portion of the funds for personal use or perpetuating a fraudulent trading scheme.

The case, filed by the CFTC, dates back to February 11, 2020, when Ackman is accused of orchestrating a scam from August 2017 to December 2019. The indictment alleges that Ackman manipulated the scheme to raise funds for trading digital commodity assets, but misappropriated the funds.

More than 150 individuals and entities have reportedly entrusted funds totaling at least $33 million to Ackman. Shockingly, less than $10 million of the funds deposited were actually traded, with the remainder being fraudulently diverted for personal use or prolonging the fraudulent operations.

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In a keynote address at London’s City Week 2023, CFTC Commissioner Christy Goldsmith Romero proposed reducing the anonymity of cryptocurrencies as a way of mitigating the risks associated with digital assets. Romero emphasized the importance of government and industry working together to address cryptocurrencies’ appeal to illicit finance.

She emphasized that managing the risks of digital assets is critical to maintaining market integrity, national security and financial stability. Romero specifically cited the need to address the challenge of identity verification to minimize illicit financial risks in the cryptocurrency market, as the use of mixers and anonymity-enhancing technologies pose significant potential risks.

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