The Commodity Futures Trading Commission (CFTC) has sued Cash FX Group and three individuals in connection with an alleged $950 million foreign-exchange investment scheme involving cryptocurrency.

According to a CFTC press release, the complaint was filed Friday in the US District Court for the Middle District of Florida. The agency alleges the defendants operated a multilevel marketing Ponzi scheme, soliciting and accepting more than $950 million from participants for the purported purpose of trading retail foreign currency contracts in a commodity pool.

The defendants named in the case are Cash FX and its chief executive, Huascar Jose Lopez Castillo of Brazil; The Conversion Pros and its CEO, Ronald Pope of Oregon; and Justin Halladay of Florida.

The CFTC alleged that the defendants falsely claimed pool funds were managed by expert traders using proprietary algorithms and artificial intelligence, and promised participants returns of up to 15% per week. In practice, the regulator said, Cash FX carried out minimal forex trading and misappropriated most of the participant funds, using new contributions to pay fictitious trading profits while directing millions of dollars to each defendant.

The agency further alleged that Cash FX provided participants with false accounting statements, and that participants lost at least $406 million.

"The Division of Enforcement has continued to refocus on its core mission of protecting the public from fraud and manipulation," said Director of Enforcement David I. Miller. "This critical action, and the massive fraud it targets, reflects our steadfast commitment to addressing fraud wherever we find it."

The CFTC holds anti-fraud authority over commodity pools and retail foreign currency contracts, the instruments at the center of the complaint. Because the case is a civil enforcement action, the agency must prove its allegations in federal court, where the defendants will have the opportunity to respond.

The enforcement action comes as the CFTC moves forward with its approach to overseeing the digital asset sector. Cointelegraph reported on Sept. 18 that the agency had submitted a new regulatory action covering crypto asset transactions and markets for White House review, though details of the planned regulations were not disclosed. The submission came days after the Senate failed to advance the CLARITY Act, legislation aimed at establishing a federal regulatory framework for crypto markets.

In related coverage, Bernstein analysts have said they expect "aggressive" rulemaking from the SEC and CFTC following the CLARITY Act's failure.