Key Highlights
- The CFTC sued Cash FX Group, The Conversion Pros and three individuals over an alleged forex investment scheme.
- The agency alleges the operation collected more than $950 million through more than 400,000 accounts between 2019 and 2023.
- More than 6,000 U.S. accounts allegedly contributed at least $27 million.
The Commodity Futures Trading Commission (CFTC) has sued Cash FX Group S.A., The Conversion Pros Inc. (TCP) and three individuals, alleging they operated a multi-level marketing scheme that collected more than $950 million through purported forex investment programs.
The complaint was filed September 25 in the U.S. District Court for the Middle District of Florida. It names Cash FX founder and CEO Huascar Jose Lopez Castillo, TCP President Ronald Pope and Cash FX promoter Justin Halladay.
According to the CFTC, the operation ran from at least June 2019 through December 2023 and involved more than 400,000 accounts. More than 6,000 accounts were associated with U.S. residents, who allegedly contributed at least $27 million.
CFTC alleges most funds were not traded
The CFTC alleges Cash FX told participants that 70% of their contributions would be allocated to forex trading conducted by professional traders, trading bots and artificial intelligence.
The remaining 30% was presented as funding for an “Academy Program” offering trading education.
The agency alleges that only a fraction of the money collected was actually used for forex trading — a figure this piece cannot state precisely without confirming the exact percentage against the complaint itself.
The complaint estimates that participants lost at least $406 million. It also alleges that some payments made to earlier participants came from funds contributed by later participants rather than from trading profits.
Recruitment played a role in the scheme
The CFTC describes Cash FX as a multi-level marketing operation in which participants were encouraged to recruit new members.
According to the complaint, participants could receive “Trade Returns,” which were presented as profits from forex activity, and “Pyramid Returns” tied to recruitment.
The agency alleges participants could receive returns of up to twice their original contributions through the two programs.
The complaint further alleges that participants were required to withdraw existing funds before reinvesting them, with a 20% withdrawal fee directed toward the company’s commission structure.
CFTC challenges AI trading claims
The regulator also disputes Cash FX’s claims about its use of artificial intelligence.
According to the complaint, promotional material attributed weekly returns of around 10% to an AI trading system developed by Cash FX. Pope allegedly made separate claims of weekly returns of approximately 15%.
The CFTC alleges the system was never deployed.
The complaint cites a November 2021 livestream in which Cash FX’s marketing director reportedly acknowledged that the proposed AI system had not yet launched.
The agency argues that these claims contributed to the impression that participants’ funds were being actively traded.
Internal messages cited in complaint
The CFTC also cited internal communications between Lopez and Pope.
According to the complaint, Lopez manually entered daily “trade return” rates, while Cash FX recorded no losing trading day between July 2019 and July 2023.
The agency also referenced communications concerning participant complaints and cryptocurrency wallets used to process payments.
In one exchange cited in the complaint, Pope allegedly discussed changing payout wallets following concerns about transactions involving participant funds.
These communications are cited by the CFTC as part of its allegations and have not been tested at trial.
Crypto payments added complexity to Cash FX fund flows
The CFTC alleges that Cash FX used cryptocurrency wallets as part of the broader investment scheme, meaning some funds moved through blockchain networks and across jurisdictions rather than solely through traditional banking channels.
That could make tracing the movement of funds more complex. Investigators may need to follow transactions across wallets, exchanges and points where cryptocurrency was converted into other assets or fiat currency.
Wealth Recovery Solicitors (WRS), a UK law firm involved in crypto tracing cases, separately estimated that Cash FX ranked among the 10 largest cryptocurrency scams by revenue in 2022, with losses of about $145.5 million.
That estimate covers a different period and uses a different methodology from the CFTC’s case. The regulator alleges that Cash FX collected more than $950 million through over 400,000 accounts between 2019 and 2023.
Blockchain records can help trace fund movements
Public blockchain records can give investigators a transaction history showing how cryptocurrency moved between addresses.
IYE Global, which investigates Cash FX-related claims, said its work can include reviewing wallet addresses, blockchain transactions and transfers involving exchanges and other payment channels.
However, a blockchain address does not by itself identify the person or entity controlling it. Investigators may need additional records from exchanges, payment providers or other sources to connect an address to a specific individual or organization.
WRS and IYE Global are separate from the CFTC’s enforcement action and provide investigation or recovery-related services. Their estimates and assessments should therefore not be treated as findings by the regulator or the court.
Cash FX had faced earlier regulatory warnings
The complaint also points to regulatory warnings issued while Cash FX was operating.
The UK’s Financial Conduct Authority issued a warning about Cash FX in December 2019, advising consumers against dealing with the firm.
The CFTC also referenced regulatory concerns involving EverFX, a broker that was promoted in connection with Cash FX.
According to the complaint, Cash FX representatives responded to regulatory criticism through promotional material while continuing to present the operation as legitimate.
Operation continued amid withdrawal pressure
The CFTC alleges Cash FX began facing increasing withdrawal pressure in late 2022.
According to the complaint, Cash FX entered dissolution and liquidation proceedings in Panama in October 2022 but continued accepting participant funds afterward.
The agency alleges the final participant contribution was received around May 2023, after which the company’s website eventually went offline.
CFTC has also pursued other commodity pool fraud cases
The Cash FX lawsuit follows another CFTC enforcement action involving an alleged commodity pool fraud case.
In July, the regulator sued Trevor L. Vernon and Argent Capital Management over an alleged $14 million commodity pool fraud.
The CFTC sought investor restitution, financial penalties and permanent trading bans in that case.
The earlier action provides additional context for the regulator’s recent enforcement activity involving alleged fraud in commodity-related investment schemes.
CFTC seeks restitution and penalties
The CFTC has charged the defendants with fraud under the Commodity Exchange Act and related regulations, including allegations involving retail forex transactions and an unregistered commodity pool operator.
The agency is seeking permanent injunctions, restitution for affected participants, disgorgement of alleged ill-gotten gains and civil monetary penalties.
It is also seeking restrictions on the defendants’ ability to engage in certain commodity-interest activities or future CFTC-registered operations.
The allegations remain claims contained in a civil complaint and have not been proven in court. The defendants will have an opportunity to respond as the case proceeds.
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