ROFX Ordered to Pay $225 Million in CFTC Lawsuit

ROFX, along with individual defendants, has been ordered by a Miami federal court to pay over $56 million in restitution to defrauded customers and a $169,086,837 civil monetary penalty. The default judgment order is a result of the CFTC’s August 31, 2022 amended complaint charging the nine defendants and defendant Timothy F. Stubbs with fraud, misappropriation, and registration violations in connection with a fraudulent FX scheme.

ROFX and its co-defendants have been ordered to pay a hefty sum for their fraudulent forex transactions, marking a significant development in the regulation of the crypto industry.

ROFX Misappropriated Over $57 Million

According to the CFTC, ROFX’s fraud involved forex transactions which resulted in the misappropriation of over $57 million of customer funds. Timothy F. Stubbs, a certified public accountant, was ordered to pay a $314,000 civil monetary penalty and $153,000 in restitution. He was found to have accepted and misappropriated customer funds intended for forex trading.

ROFX’s Fraudulent Activities

From January 2018 through September 2021, ROFX.net was used to fraudulently solicit and misappropriate at least $57.5 million from U.S. and international customers for purported trading in forex. ROFX falsely claimed to trade forex utilizing a highly successful automated trading robot with guaranteed coverage of losses. Customer funds were wired to offshore entities with no connection to forex trading. The defendants also acted as futures commission merchants by doing business as ROFX, soliciting or accepting orders for retail forex transactions via the ROFX website, and accepting funds in or in connection with such transactions without being registered with the CFTC.

Victims Take ROFX to Court

In September 2021, dozens of victims took ROFX and its founders to court over the fraud. At the time, there were letters from 300 victims in support of forming a class action.

CFTC’s Recent Victories

A recent lawsuit brought by the CFTC resulted in a consent order against Erik J. Hass and Simply Gains, Inc. after fraudulently soliciting millions for forex trading without the necessary registration as mandated by the Commodity Exchange Act. Simply Gains, Inc. solicited at least $2.1 million from at least 21 individuals to fund their Forex commodity pool operation.

Conclusion

The hefty penalty against ROFX and its co-defendants marks a significant development in the regulation of the crypto industry. It serves as a stark reminder of the importance of compliance with financial regulations and the severe consequences of fraudulent activities. As the CFTC continues to crack down on fraudulent activities in the forex and crypto industries, it is crucial for companies and individuals to ensure they are operating within the law to avoid similar repercussions.