Alan Friedland settled fraud allegations with the Commodity Futures Trading Commission (CFTC) on February 3, 2022, four days into his jury trial in the United States District Court for the Southern District of Florida. This resolution came after the CFTC presented multiple witnesses, marking an unusual turn in a case that had proceeded to active litigation. Most settlements in such regulatory actions occur prior to trial commencement.
The trial against Friedland began on January 31, 2022. On the first day, a jury panel was selected and sworn in, followed by opening statements from both the CFTC and Friedland's legal team. The CFTC then called its first witness for examination and cross-examination.
February 1 saw the CFTC present its second and third witnesses. Their testimony included both direct examination and cross-examination by the defense. Video footage from an earlier CFTC deposition was also played for the court that day.
The proceedings continued on February 2, with the examination and cross-examination of the CFTC's fourth and fifth witnesses. The commission steadily built its case over these initial days, detailing allegations against Friedland.
By February 3, the fourth day of trial, the CFTC had called its sixth and seventh witnesses to the stand. At 12:12 p.m., the court held a discussion with the parties. A recess was called two minutes later. Court resumed at 1:45 p.m., when the judge discussed settlement terms with Friedland and the CFTC. The parties reached an agreement, stating its terms on the record. Friedland acknowledged the settlement in open court. The court adjourned at 1:49 p.m.
Details of the settlement remain undisclosed to the public. However, the court issued an order on February 3, directing both parties to file a joint motion for entry of consent judgment and permanent injunction. This procedural step suggests Friedland agreed to terms favorable to the CFTC.
The expected consent judgment will likely include disgorgement of illicit gains, a monetary judgment, and a civil monetary penalty. A permanent injunction would prohibit Friedland from engaging in further violations of the Commodity Exchange Act and CFTC regulations. Such injunctions often bar individuals from trading or soliciting funds in the commodities markets. The joint motion for entry of consent judgment must be filed by March 7, 2022.
This settlement contrasts sharply with Friedland's earlier public statements. In April of the previous year, he informed investors in his NRGY project that "US authorities 'were not empowered to regulate a cryptocurrency project'." He further claimed he was "under no obligation to register CompCoin, or the software or myself," and asserted that US regulators had "botched this up very, very badly." The CFTC's original lawsuit against Friedland specifically alleged fraud concerning CompCoin, a digital asset project.
CompCoin was the precursor to NRGY, which Friedland launched in early 2021. NRGY, described by some as a reboot of the alleged CompCoin Ponzi scheme, saw an initial surge in value typical of such projects, followed by a significant decline. To counter this downturn, Friedland introduced NRGYGO in August 2021. This new iteration experienced a similar trajectory, with a later price pump in mid-November before resuming a downward trend. These projects often rely on new investor funds to pay earlier investors, a hallmark of Ponzi structures.
As of this reporting, US regulators have not announced any enforcement actions regarding NRGY or NRGYGO. The CFTC, however, maintains broad authority over commodity derivatives, including certain digital assets, and regularly pursues individuals and entities for fraudulent schemes in this space.
The settlement concludes the active litigation phase for Friedland regarding CompCoin, but the financial implications and the specifics of the permanent injunction will be formalized in the upcoming consent judgment.