Ninth Circuit Affirms CFTC Win Against Crypto Promoter Crombie, Rules Deals Were Futures

CFTC WINS NINTH CIRCUIT RULING AGAINST CRYPTO PROMOTER

The Ninth Circuit just handed the CFTC a decisive win in its long-running case against James Devlin Crombie, affirming the agency’s power to police unregistered commodity transactions—even when the underlying assets sit at the blurry edge of crypto. The ruling keeps a $1.1 million judgment and permanent trading ban in place, sending a clear signal that courts will not let clever wrappers around digital tokens shield promoters from oversight. For an industry already watching the SEC-CFTC turf war, this decision tilts the field toward regulators who can prove “commodity” status.

The trouble started in 2011 when Crombie pitched investors on a supposed foreign-currency trading platform called “Big Trading International.” He raised roughly $1.8 million, promising 10-to-15 percent monthly returns while routing funds through personal accounts and paying early backers with later investors’ money. After the CFTC sued for fraud and failure to register, the district court found Crombie liable for off-exchange futures trades and ordered restitution plus a trading ban. Crombie appealed, arguing that the contracts at issue were not futures at all and that the CFTC lacked jurisdiction once the scheme collapsed.

On appeal, the Ninth Circuit zeroed in on one question: whether Crombie’s agreements met the legal definition of commodity futures. The panel concluded they did, because investors locked in prices today for delivery later, with no meaningful delivery ever intended. Judges rejected Crombie’s “not futures” defense as an attempt to relabel classic boiler-room tactics. They also upheld the district court’s finding that Crombie acted as an unregistered commodity trading advisor, closing the last avenue for reversal.

The immediate result is straightforward: Crombie stays on the hook for the full judgment, faces a lifetime trading ban, and the CFTC’s enforcement playbook gains another precedent. Victims may finally see restitution move forward, while copycat promoters lose one more argument to hide behind. Regulators gain breathing room; defense counsel lose a talking point.

For crypto markets the message is sharper than the opinion’s narrow facts suggest. Although the case never mentions Bitcoin or tokens, the Ninth Circuit’s willingness to stretch “commodity” to cover novel instruments shows how easily digital assets can fall under CFTC jurisdiction once any futures-like feature appears. That broad reading pressures exchanges and DeFi protocols that offer leveraged or derivative exposure to digital commodities, because the same logic could apply without new legislation. The SEC, meanwhile, keeps its fraud tools but sees its rival agency strengthen its claim over anything resembling futures or swaps.

Traders and platforms now operate with clearer downside risk: structure a product too close to traditional futures without registration, and the CFTC can pursue both the firm and its principals years later. Expect compliance teams to re-examine offshore wrappers, leverage limits, and marketing language that promises fixed returns. The case also quietly underscores that decentralization offers little shelter once investor funds cross into U.S. territory.

Bottom line: another precedent favors the regulators, and the margin for creative structuring just got thinner.