Ninth Circuit Expands CFTC Reach: Offshore Futures Operators Now in U.S. Regulatory Radar

Court Hands CFTC Fresh Win Over Unregistered Trader

The Ninth Circuit just handed the CFTC a clean victory against James Devlin Crombie, ruling that the agency can still punish him for running an unregistered futures-trading business even though he claims he never touched U.S. customers. The decision strengthens the agency’s long reach and signals that offshore operators cannot dodge U.S. oversight simply by pointing to foreign servers or foreign clients.

Crombie ran a website offering futures contracts and collected over $1.3 million from investors between 2008 and 2011. The CFTC sued him for operating without registration and for fraud, but Crombie fought back, arguing that because his trading platform sat on foreign servers and most customers were abroad, the U.S. agency lacked jurisdiction. A federal judge in San Francisco rejected that claim, froze his assets, and ordered him to pay more than $2 million in restitution and penalties. Crombie appealed, insisting the Commodity Exchange Act could not reach his overseas activity.

The three-judge panel disagreed. It held that the Act’s anti-fraud and registration provisions apply whenever U.S. “commerce” is involved, and that Crombie’s website, dollar-denominated accounts, and U.S.-based marketing created enough of a domestic hook. Judges stressed that the CFTC need not prove every investor was American; it only needs to show that the conduct had a “direct and significant connection” with U.S. markets or participants. Because Crombie accepted U.S. wires and used the American banking system, the court found the link solid.

The ruling tightens the noose on anyone who hopes geography alone will keep the CFTC at bay. Offshore crypto or derivatives platforms that touch U.S. rails—dollar settlement, U.S. marketing, U.S. servers leased from U.S. providers—now face clearer exposure. The decision also lowers the bar for proving jurisdiction: once regulators show any meaningful U.S. nexus, the burden shifts to the defendant to prove total insulation.

For crypto markets, the message is blunt. Tokens or platforms that even arguably function like futures, or that allow U.S. dollar on-ramps, sit inside the CFTC’s crosshairs regardless of where the code lives. Exchanges that still flirt with the “offshore-only” defense just lost another layer of cover, and traders should assume that any service denominated in dollars or marketed in English is on U.S. regulatory radar.

The Ninth Circuit just made “we’re based abroad” a weaker shield; operators who ignore that shift are betting against both the law and the odds.