On July 7, the CFTC announced that it had filed a complaint alleging an unregistered North Carolina-based commodity pool operator and its controlling person solicited over $14 million from 60 or more participants from at least March 2022 to at least February 2026. The complaint, filed in the U.S. District Court for the Western District of North Carolina, claims the defendants made misleading statements to lure participants into investing in the fund to trade equity index futures, options thereon, and crypto assets. The defendants allegedly fabricated performance and profit results to show consistent returns, despite purported trading losses of more than $8.6 million. The CFTC further alleged that the defendants used participants’ funds in a Ponzi-like scheme to conceal the ongoing losses and fraud. During the CFTC’s investigation into the matter, the controlling person allegedly made false statements during sworn testimony, including claiming that the fund was profitable each year and that the trading accounts were funded with “personal” funds, rather than with participants’ money.

The CFTC asserts that these actions violate the Commodity Exchange Act and CFTC regulations on seven counts, including fraud in connection with futures contracts, fraud in connection with commodity options, fraud and deceit by a pool operator, and fraud in connection with crypto assets, among others. The complaint requests permanent injunctive relief, full restitution, disgorgement, trading and registration bans, and civil monetary penalties.