As the cryptocurrency market thrives, the CFTC, burdened with regulatory responsibilities, finds itself mired in layoffs and management turmoil.
Written by: Lydia Beyoud, Nicola M White, and Liam Vaughan, Bloomberg
Compiled by: Luffy, Foresight News
In March of this year, in a conference hall not far from Mar-a-Lago in Boca Raton, Caroline Pham, the acting chair of the Commodity Futures Trading Commission (CFTC), took the stage under the neon lights to deliver a speech commemorating the agency's 50th anniversary.
Since 1975, when futures were primarily used by industrial companies and farmers, the CFTC has quietly overseen a market exceeding $500 trillion in size, as financial derivatives exploded and cryptocurrencies emerged. However, Pham's visit is not about politely listing the CFTC's achievements.
After some small talk, Pham told attendees at the Futures Industry Association meeting: CFTC's lawyers have filed too many lawsuits, imposed excessive fines, and rushed to constrain well-meaning companies without first establishing basic rules. She also stated that the agency is facing issues of "internal governance" and "misconduct" that require "immediate corrective action."
In some ways, she is just an acting chair, and Pham, the less experienced Republican on the bipartisan five-member CFTC committee, is an unexpected candidate for this top position. She was previously a compliance officer on Wall Street and later became a cryptocurrency advocate, actively engaging on social media. She garnered attention for publicly pointing out internal issues and criticizing some staff members. "The degree to which the committee has deviated from the Constitution pains me," she wrote in a public statement. Another statement said: "This is not just regulation through enforcement; this is arbitrary regulation." She also posted on LinkedIn, stating: "I again call for a mandatory CFTC employee training program" to elevate "levels of basic knowledge."
Personnel Turmoil and Layoff Waves: Internal Chaos and Suspicion Within the Agency
Now, seven months into what is typically seen as a "transitional" position, Pham has dismissed several senior executives and has led at least a 15% reduction in staff citing backlog, while terminating one-third of pending investigations. Her term was originally set to end this summer, when Donald Trump's official nominee, former CFTC Commissioner Brian Quintenz, was expected to take over. However, the appointment process for Quintenz has been stalled after complaints from Tyler Winklevoss, co-founder of the cryptocurrency exchange Gemini, claimed that the candidate had too many conflicts of interest and was not a true supporter of cryptocurrencies. This accusation came as a surprise for someone who previously led global policy at a16z. Quintenz is also a board member of the prediction market Kalshi and declined to comment on this article.
Cuts to the CFTC, a rigorous financial regulatory agency, may not provoke the same strong protests as cuts to the Environmental Protection Agency, the Department of Education, or even the SEC. During Pham's predecessor's tenure, the CFTC indeed faced criticism for over-regulation. However, the status of this low-profile agency is crucial: futures and commodities are at the core of the global economy, driving transactions in energy, food, and finance, affecting the prices of everything from coffee and corn oil to gasoline. The collapse of the financial system in 2008 was partly due to the proliferation of complex derivatives, which were later brought under the CFTC's regulatory umbrella.
Over twenty current and former CFTC insiders and industry professionals candidly discussed internal affairs of the CFTC in anonymous interviews with Bloomberg Businessweek. They stated that the CFTC's enforcement work is progressing slowly, with only two of the five commissioners coming from opposing parties, making it difficult for the CFTC to carry out its critical business. Some issues existed before Pham took office. Agency spokesperson Taylor Foy stated, "The problems are becoming more apparent now because we are exposing them," and that all criticisms raised by Pham are intended to help "the CFTC and its staff realize their full potential," and fulfill the duties assigned to her by the Trump administration. "Pham has never been instructed to 'sit on her hands' during her leadership of the CFTC," Foy stated in a press release, "In fact, when she was appointed as acting chair in January, she was directed to manage the CFTC like a permanent chair."
As the agency's responsibilities and potential market risks continue to grow, turbulence persists. New related measures are being formulated that will allow cryptocurrencies to permeate every corner of finance, from Americans' retirement funds to the Treasury's vault. Prediction markets like Kalshi and Polymarket allow investors to bet millions on the outcomes of real-world events such as elections. Meanwhile, the president and his family are making significant inroads into the cryptocurrency sector.
The CFTC has about 640 employees, with a budget that is only one-sixth of the SEC's. There are concerns that it will struggle to meet new responsibilities. "As new markets and technologies rapidly develop, we must have a regulatory agency equipped with sufficient resources and expertise to protect consumers, prevent financial crime, and promote responsible innovation," said former CFTC division director Dorothy DeWitt.
The White House spokesperson denied that the CFTC is in chaos, stating: "President Trump has made 'making America the global cryptocurrency hub' a priority and has called for revitalizing the Commodity Futures Trading Commission to play a greater role in achieving this goal. Acting Chair Caroline Pham has done a great job advancing this work, and the Trump administration appreciates her leadership and focused public service."
Pham has served multiple terms at the CFTC, first becoming a commissioner in 2022. After taking over as acting chair in January, she dismissed the human resources director. This official was previously responsible for investigating union allegations from 2023, when the union claimed that during internal meetings regarding enforcement matters, the CFTC allowed Pham to abuse and intimidate employees.
Pham denied any intimidation, and Foy stated that the complaint from the National Treasury Employees Union provided a "false and unfair" description of "detailed and substantive discussions." "Some of my comments and questions to staff as a commissioner are not always well received," she said in a statement last year, "Speaking the truth can be uncomfortable, but it is crucial for governance and oversight to ensure accountability."
The CFTC stated that the dismissal of the human resources director was due to a series of administrative errors, including failing to crack down on abuses of the agency's remote work policy and allowing "illegal targeting of Republicans, violating the First Amendment." Earlier this month, the agency announced it would review employees' compliance with attendance requirements and mentioned a former employee. This individual allegedly violated government policy by working remotely abroad while serving as the NTEU chair for the CFTC. A preliminary investigation into the NTEU complaint was never completed, but a law firm concluded in 2025 that commissioners are not bound by the agency's harassment policies and that, in any case, Pham did not violate agency regulations.
Pham also removed the agency's Chief Financial Officer. According to insiders, the two had conflicts over Pham's business travel requests and her demand for the CFTC to cover her commuting costs between Washington and New York. Foy stated that all trips funded by the agency were compliant with government regulations and had been approved by the agency's ethics officials, "implying that the CFO was reassigned due to disagreements with her on travel matters is false." The personnel changes "are not personal but are aimed at addressing ongoing concerns about the efficient use of CFTC projects, programs, and taxpayer funds," Foy said. "After taking over as acting chair, Pham made several personnel adjustments, which is common in a new administration, including the CFO position." The former HR director declined to comment; the former CFO did not respond to requests for comment.
Some senior professionals within the agency accepted Elon Musk's voluntary resignation proposal put forth within the government. A series of departures had already occurred towards the end of the Biden administration, further weakening the agency's internal experience. Following a Supreme Court ruling that paved the way for large-scale federal layoffs, the CFTC announced in July that it would cut 24 more positions, affecting departments such as market oversight, enforcement, and data. Foy stated in a statement that these layoffs are part of "ongoing restructuring efforts aimed at reducing unnecessary reporting layers."
The exits from the enforcement division (responsible for investigating cases ranging from the billions of dollars fraud cases like Sam Bankman-Fried's FTX to ordinary record violations) are particularly severe. The agency has requested a 30% reduction in the number of enforcement staff in its budget application for Fiscal Year 2026 compared to Fiscal Year 2024. Pham has also reorganized this department.
Pham, who previously interned in the enforcement division, pointed out that the handling of the My Forex Funds case demonstrated the need for comprehensive reform. In 2023, the CFTC charged this online trading platform with running a Ponzi scheme and sought to freeze its assets, mistakenly identifying payments made by the company to the tax authorities as "attempting to transfer millions of dollars out of government oversight." When agency lawyers failed to properly correct the record, the judge dismissed the case, ordering the CFTC to pay nearly $3.2 million in sanctions and reimburse My Forex Funds' legal fees.
After the ruling was made, Pham issued a statement noting that the judge mentioned her earlier concerns about the CFTC's conduct in this case, which "is reassuring," and suggested that this matter indicates the agency has fallen to a low point. "This case clearly illustrates that there has long been a culture of 'CFTC above the law' within the department, believing that violations are justifiable simply because the CFTC is a government agency," she wrote. After the case failed, the regulatory agency suspended four lawyers and one investigator in Chicago.
To clear the backlog of pending cases, Pham announced an initiative she calls an "enforcement sprint" during her speech in Boca Raton, inviting companies to proactively reach out within two weeks to seek reduced fines. This plan positions Pham as a Trump-style "deal maker." However, in practice, the initiative has been difficult to advance: despite nearly 24 companies attempting to reach agreements, no deals have been announced yet. According to an insider, six "sprint" settlement agreements are awaiting processing by Democrat Kristin Johnson on the commission. Johnson declined to comment.
Besides layoffs, the CFTC has also reduced spending on some tools for investigating cryptocurrency trading, including a contract canceled in March. Foy stated that the cancellation was done in accordance with government cost-cutting directives, and the department has another service to meet the same needs.
Multiple interviewees stated that the atmosphere at the CFTC's Washington headquarters and its offices across the country is permeated with resentment and suspicion, resulting from layoffs and criticism. Some lawyers reportedly are hesitant to propose case filings or even to request subpoenas. Foy called this assertion "absurd." Of the five politically appointed commissioners, three have resigned with no one yet to take their place (commissioners must vote to decide on sanctions or fines against companies), exacerbating the agency's inertia. With only one Republican and one Democrat remaining, operations have become deadlocked. "I can't get bank records, can't get evidence. I can't do anything," one lawyer complained.
"Acting Chair Pham should not be held responsible for any deadlock," Foy said. After Pham took office, Foy became the spokesperson for the CFTC. He also stated that internal analysis found that during Biden's last year in office, some out-of-state offices reduced the filing of new cases; Pham has worked hard to support agency staff. "She acknowledges staff achievements and strives to address issues before they escalate," he said.
At the end of May, Brian Young, the head of the enforcement division appointed by Pham, accepted a buyout three months into his tenure. Young, who previously led the agency's whistleblower office, attempted to inspire staff upon his departure, acknowledging that even in the best cases, their work could be both difficult and thankless. "In your toughest days, I hope you find solace in the fact that 'the country needs you,'" he wrote in an email to colleagues. Young declined to comment. In June, the agency welcomed a new acting head of enforcement, Paul Hayeck. "We still have our previous capabilities," Hayeck said.
The data itself tells the story. Since Pham took charge on January 20, the CFTC has announced only one new enforcement action. In contrast, there were over 12 actions in the first six months of 2024, and more than 24 actions in the same period in 2023. The agency has stopped imposing fines for registration violations against cryptocurrency companies, which in previous years had been the cause of multiple actions. The SEC, Justice Department, and Consumer Financial Protection Bureau have also seen similar enforcement slowdowns. In May, Trump vowed in an executive order to curb what he termed the "absurd and unfair" over-criminalization in American society.
Expansion of Regulatory Responsibilities and Resource Dilemmas: Cryptocurrency Regulation Becomes a New Challenge
As the CFTC's power is being curtailed, its responsibilities are about to expand. In July, Congress passed a landmark cryptocurrency-related bill involving tools like stablecoins. Another comprehensive Clarity Act has passed the House and is now pending in the Senate. If enacted, this will establish the first comprehensive legal framework for the industry. However, critics such as Massachusetts Senator Elizabeth Warren and former Democratic CFTC Chair Timothy Massad argue that the legislation does not do enough to protect consumers, combat money laundering, or prevent conflicts of interest, and that it contains loopholes. Warren called these bills "charity for an industry that poured $230 million into the 2024 elections."
The Clarity Act defines most cryptocurrencies, including Bitcoin and Ethereum, as "digital commodities." This means that the majority of regulatory responsibilities for the market will fall to the CFTC rather than the much larger SEC. However, it remains unclear how many additional employees and resources the agency will add to cope with this significantly increased responsibility.
"The CFTC may be the most neglected and underfunded financial institution in the federal government," said Carol Goforth, a professor at the University of Arkansas School of Law studying digital asset regulation. "Is it capable of handling all of this? Certainly not."
However, Republicans and former CFTC Acting Chair Walt Lukken stated that the agency "certainly has the legal authority and appropriate management capability" to "meet this challenge."
"Caroline is capable and intelligent, and is doing her best to advance President Trump's agenda," Lukken said.
Meanwhile, the Trump family continues to increase investments. To date, they have positioned themselves in cryptocurrency trading platforms, stablecoins, non-fungible tokens (NFTs), cryptocurrency mining businesses, and various meme coins. According to Bloomberg analysis, despite Trump's assets being held in a trust managed by Donald Trump Jr., he has added $620 million in wealth from this industry in just the past few months.
"People in the cryptocurrency space do not like what he is doing," said Massad, who currently serves as the director of the Digital Asset Policy Project at Harvard Kennedy School. He noted that Trump launched a meme coin two days before his inauguration, reportedly charging millions in fees before the token's value plummeted by 80%, a decision he called "a disgrace to the industry."
"The president and his family have never, and will never, be involved in conflicts of interest," White House spokesperson Karoline Leavitt stated, "The media continually tries to fabricate conflicts of interest, which is irresponsible and only serves to increase public distrust in what they read."
For a long time, cryptocurrencies have been relatively independent of the broader economic system, but this is changing. Legislators are pushing to include virtual currencies in the 401(k) retirement plans of ordinary Americans, while banks and asset management companies, driven by FOMO, are increasingly announcing blockchain-related projects. Stablecoins backed by low-risk assets like government bonds are linking digital markets with mainstream markets. Trump has even issued an order requiring that cryptocurrencies seized by law enforcement be included in digital asset "reserves."
In addition to cryptocurrencies, the CFTC has recently approved large-scale prediction markets. For decades, Americans have been prohibited from making large bets on real-world events like politics and sports using derivatives, due to concerns that this would fuel gambling or undermine democracy by incentivizing insiders to profit through influencing outcomes. Kalshi (which hired Donald Trump Jr. as a special advisor in January) successfully challenged this regulation in 2024, becoming one of the first exchanges to receive federal approval to list contracts on political events. Other agencies have followed suit, ushering in a new era: Americans can not only bet millions on "who will win the Grammy Awards" but also on who will leave the presidential cabinet first, Pete Hegseth or Tulsi Gabbard.
Several former CFTC officials testified that the agency lacks the resources to adequately review the large number of new contracts listed weekly by Kalshi and its competitors on their websites. Meanwhile, state regulators and tribal leaders are suing Kalshi, accusing it of circumventing jurisdiction and conducting sports betting under the guise of derivative trading. Kalshi denies this.
Quintenz's Appointment Deadlock: Uncertainty for the CFTC's Future
CFTC employees humorously joked that the government hasn't appointed a permanent chair because they forgot about the agency's existence. If Quintenz's appointment is ultimately approved, he will have a lot to contend with, especially in boosting employee morale. However, his appointment is no longer a sure thing.
This summer, the CFTC released a large number of internal emails in response to requests for expedited responses under the Freedom of Information Act. The emails show that the agency communicated with Quintenz and a potential staff member regarding hiring, the licensing the CFTC was considering, and the status of litigation related to Kalshi's competitor PredictIt. Kalshi's CEO stated that Quintenz had not participated in board matters since the end of last year; supporters of Quintenz argued that such inquiries are normal for a chair hoping to hit the ground running upon taking office. However, critics, including Winklevoss, seized on these emails, claiming Quintenz had conflicts of interest and should have his appointment rescinded. The White House issued a statement supporting Quintenz at the end of July, but it is unclear when the Senate will vote on this.
According to Quintenz's ethics disclosure documents, if confirmed, he will leave the boards of a16z and Kalshi and divest his interests in both. At the Senate hearings in June, he promised to appoint an internal "fairness reviewer" and to recuse himself from related matters where appropriate. However, this may pose new problems for the agency.
Three commissioners have already left, and the remaining Democratic commissioner is also about to leave, with Pham stating that she will also depart. This means that Quintenz will likely find himself in a "one-person committee" situation, more of a commander than a chair. Some analysts claim that while this situation is unprecedented, it may not hinder the agency's operations. Trump has already fired Democratic representatives from the Federal Trade Commission and the National Labor Relations Board, ignoring the long-standing tradition of bipartisan cooperation. When Senator asked Quintenz if he wanted the CFTC to be fully staffed with commissioners, he responded that while he values others' opinions, "I will not dictate to the president."
Next year, the CFTC will take over a new market valued in the trillions of dollars and will also move to a new office location in the suburbs of Capitol Hill, which is only half the size of the current headquarters and far less grand. Contracts have been signed, but even with a reduced staff, under Trump's directive that all federal employees return to full-time work, the new office will still be quite cramped. This complex is named "Patriot Plaza."