A federal inquiry has found that the Commodity Futures Trading Commission (CFTC) sharply reduced digital asset enforcement and sidelined career staff who raised concerns about cryptocurrency platforms tied to the Trump family, while senior officials who aided those firms later moved into industry roles.
Key findings from the inquiry
The investigation, based on records and interviews with more than thirty current and former officials, concluded that:
- Enforcement in the digital asset sector has dropped dramatically under the current administration.
- Career staff who challenged approvals for certain crypto firms were placed on leave or subjected to internal probes.
- Top political appointees intervened to help three companies with Trump family connections secure regulatory approvals, bypassing normal review processes.
Since the start of the second Trump administration, the CFTC has brought only two digital asset cases, both against individuals, compared with more than eighty during the prior administration. At least five crypto investigations were closed, including one involving a large trading platform.
Intervention in cases involving Trump-linked crypto firms
The inquiry details interventions by then-acting chair Caroline Pham and senior counsel Brigitte Weyls that cleared the way for:
- Polymarket – a prediction market platform previously funded by a venture firm partly owned by Donald Trump Jr.
- Crypto.com – which partnered in October with Trump Media & Technology Group to launch a prediction market product.
- Gemini Titan – a Gemini affiliate connected to Eric Trump through founders Cameron and Tyler Winklevoss.
Career staff had warned about:
- Uneven treatment of smaller users
- Weak fraud protections
- Incomplete or rushed internal reviews
Despite those warnings, the applications moved forward. In the case of Gemini Titan, agency emails cited in the report show Weyls drafted her own approval recommendation, reversing standard procedures in which staff conduct independent analysis. The application then received rapid clearance.
Shortly after approvals were granted, multiple officials who raised concerns were placed on leave or became the subject of internal investigations, often without being told the reasons, according to the inquiry.
Revolving door concerns
The report highlights what critics describe as a revolving door between the CFTC and the crypto firms it oversees:
- In December, Pham joined MoonPay, a cryptocurrency company working with Polymarket on a similar product line.
- Weyls became general counsel at Gemini Titan, whose application she had helped shepherd through the agency.
Ethics advocates argue that such moves risk undermining confidence in the impartiality of regulatory decisions, particularly when former officials move directly into roles with entities whose matters they previously supervised.
Enforcement decline amid rising crypto-related losses
The scaling back of CFTC enforcement comes as crypto-related crime and losses are rising:
- The FBI’s 2025 Internet Crime Report found crypto-linked complaints produced the largest losses of any category, totaling more than $11 billion for Americans.
- Separate analyses estimate that in 2025, more than $17 billion was stolen through digital asset scams, with the average loss per scam up 253% year-over-year.
- In the first two months of 2026 alone, more than $112 million has been lost to a mix of scams and on-chain exploits.
The inquiry concludes that an “enforcement vacuum” has emerged just as fraudulent schemes become more sophisticated and more costly. Internal checks and balances at the CFTC appear to have weakened, with the standard process of staff review and risk assessment often sidelined.
Power concentrated in a single CFTC commissioner
Leadership changes have concentrated power at the agency. Chair Michael Selig, confirmed in December, is currently the CFTC’s only commissioner after delays in filling four vacant seats.
With no other commissioners in place, Selig has sole authority over:
- Which enforcement cases advance or are closed
- How rules are drafted, amended, or delayed
- The overall pace and focus of digital asset oversight
Selig previously represented digital asset firms in private practice and later served as chief counsel to the Securities and Exchange Commission’s crypto unit. His predecessor, Brian Quintenz, was pulled from consideration in September after industry figures opposed his nomination.
Lawmakers and former officials say this concentration of power, combined with Selig’s past industry ties, fuels uncertainty about the agency’s long-term direction on both enforcement and rulemaking.
Congressional push for balanced CFTC leadership
The House Agriculture Committee, which oversees the CFTC, has urged the White House to restore a full five-member commission.
In a letter, chair Glenn Thompson and representative Angie Craig called for:
- Prompt nomination of commissioners from both parties
- Reestablishment of a broad, bipartisan panel to “ensure durable policies and transparent oversight”
They argue that a single-member CFTC increases the risk of abrupt policy shifts and undermines market confidence in the stability and fairness of the regulatory framework.
Legislative stakes: the CLARITY act debate
The inquiry’s findings land as Congress debates the CLARITY act, a bill that would formally divide digital asset oversight between the CFTC and the Securities and Exchange Commission.
The Senate Banking Committee advanced the bill earlier this month by a 15-9 vote, and the legislation is seen as a potential milestone in defining U.S. crypto regulation. Key provisions include:
- Assigning categories of digital assets to either the CFTC or SEC
- Addressing the treatment of stablecoin rewards
- Setting ethical and conflict-of-interest standards for regulators
Online prediction markets show the odds of the bill passing before 2027 have been volatile, dropping from about 75% to 50% before a recent modest rebound, reflecting deep divisions over its scope and timing.
Critics argue it could expand CFTC authority at the very moment that its enforcement approach is being questioned.
Political and policy reactions
The report has triggered rapid responses from policymakers and market watchdogs:
- Senator Richard Blumenthal said the findings show weakened enforcement against misconduct in the crypto industry and urged Congress to revisit pending legislation.
- Amanda Fischer, former chief of staff at the SEC, argued that lawmakers should reconsider giving the CFTC broader powers under the CLARITY act until concerns about its current oversight are addressed.
A White House spokesperson responded that the president’s actions are in the public interest and denied any conflicts of interest related to the appointments or enforcement record.
Industry responses
The firms named in the inquiry offered limited public comment:
- A Polymarket representative said the company maintains “strong safeguards.”
- Crypto.com stated it complies with federal requirements and operates within existing rules.
- Gemini Titan, along with Pham and Weyls, did not respond to requests for comment.
Implications for market participants
For traders and platform users, the report suggests that:
- Regulatory approvals may not reflect the level of independent, rigorous review previously assumed.
- Enforcement risk for large or well-connected firms may be lower, even as fraud risk in the market rises.
- The trajectory of U.S. crypto regulation now hinges on two moving parts: how quickly the CFTC returns to a multi-member commission, and whether Congress passes the CLARITY act in its current or a revised form.
Until those questions are resolved, the framework governing digital asset platforms, and the protections afforded to their users, will remain in flux.
Concerned about shifting crypto regulation and enforcement? Understand future impacts in our guide on US crypto regulation today.
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