Washington, D.C. – The Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Patrick Brunner, CEO and owner of 1pool Ltd. (1pool), alleging unlawful retail commodity transactions and failure to comply with federal regulations. The case was filed in the U.S. District Court for the District of Columbia on September 27, 2018.
The CFTC’s complaint accuses Brunner and 1pool of offering and engaging in illegal “contracts for difference” (CFDs) tied to commodities like gold and West Texas Intermediate crude oil, beginning in February 2016. These transactions were not conducted on a registered exchange, violating the Commodity Exchange Act (CEA).
According to the CFTC, 1pool functioned as an unregistered Futures Commission Merchant (FCM) by soliciting orders, acting as a counterparty, and accepting Bitcoin as margin for trades. Despite operating as an FCM, the company failed to register with the CFTC and implement necessary supervisory procedures.
A key allegation centers on the lack of adequate “know-your-customer” (KYC) and customer identification programs. The CFTC claims 1pool only required a username and email address to open accounts, leaving it vulnerable to money laundering and other illicit activities. This failure to diligently supervise, according to the complaint, created a significant risk.
The CFTC is seeking disgorgement of any ill-gotten gains, civil monetary penalties, restitution, a permanent ban on registration and trading, and a permanent injunction to prevent further violations of the CEA and CFTC regulations. James McDonald, CFTC Director of Enforcement, emphasized the agency’s commitment to registration and preventing illicit transactions to preserve market integrity and protect customers.
The CFTC acknowledged the cooperation of the U.S. Attorney’s Office for the District of Columbia and the Department of Justice – Computer Crimes and Intellectual Property Section in the ongoing investigation.
Source: CFTC.gov
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