The Commodity Futures Trading Commission (CFTC) opposes EminiFX investor's motion to participate in its lawsuit against Ponzi and Eddy Alexandre。

In a Jan. 31, 2024, filing to the Southern District Court of New York, the regulator concluded that the CFTC and the insolvency representative had adequately represented the interests of investors and that the EminiFX investor's motion was untimely and could delay resolution of the lawsuit.。

On May 11, 2022, the CFTC filed a lawsuit against Eddy Alexandre and his company, EminiFX, over the matter, mainly alleging that Alexandre operated EminiFX as a Ponzi scheme.。As part of the relief request, the CFTC sought damages from EminiFX participants。On the same day, the court issued a statutory restraining order, which included freezing the defendant's assets and appointing a receiver to protect and maintain those assets.。

The case was suspended while Alexandre's criminal case was heard, and the defendant pleaded guilty and was sentenced to 108 months in prison as well as huge compensation and confiscation claims.。Subsequently, the CFTC and the Defendants agreed in principle to fully resolve the matter, and the CFTC will file a proposed consent decree upon approval.。

EminiFX investors seek to participate in litigation as a matter of rights under Rule 24 (a) and as a matter of license under Rule 24 (b)。To participate in litigation as a matter of rights, EminiFX investors must demonstrate:

"(1) the application is timely; (2) the applicant has a significant protectable interest in relation to the property or transaction that is the subject of the proceedings; (3) the disposition of the proceedings may actually impair the applicant's ability to protect its interests; and (4) the existing parties may not adequately represent the interests of the applicant."。Allowing intervention could "impose unnecessary costs and burdens on the government, including increasing the complexity of cases and slowing down litigation."。"

The CFTC argued that the motion should be dismissed because the existing parties - the CFTC and the court-appointed insolvency representative - adequately represented the applicant's interests.。The CFTC is seeking full compensation to the EminiFX participants, while the receiver is tasked with protecting the frozen assets and distributing them fairly among the participants.。

The court found that the CFTC adequately represented the interests of the proposed participant, provided that the CFTC: "(1) filed a lawsuit to recover funds of [the proposed participant] and other investors; (2) obtained a restraining order freezing part of the defendant's assets; (3) obtained a judgment against the defendant requiring them to pay more than $4.5 million in damages; and (4) was distributing the funds recovered from the defendant to [the proposed participant] and other investors.。

Here, the CFTC has already taken the first two actions and hopes to obtain a judgment against the defendants in the coming weeks, while the insolvency administrator is preparing to distribute the assets that have been collected.。The interests of EminiFX investors have been fully represented。

In addition, the EminiFX investor's motion came too late。

More than 18 months ago, the movers had notified their interests at the beginning of the case.。Existing parties will be harmed by the intervention as they have reported an agreement in principle and plan to file a proposed consent order by February 16, 2024.。

Motivators will not be harmed by being dismissed because the CFTC is representing their interests.。In addition, there are no unusual circumstances that can be used as an excuse for EminiFX investors to delay.。The motion was out of place and there was no point in intervening because a settlement had been agreed upon and was awaiting approval from CFTC commissioners and the court.。

For these reasons, the CFTC asked the court to dismiss the intervention motion.。