This Week in Crypto Law: What Happened in Onchain Court Cases

U.S. courts and regulators continued to press crypto market participants on enforcement and insider-trading theories this week, with developments spanning the fallout from FTX, prediction-market litigation, and a newly unsealed indictment tied to an alleged $165 million Ponzi scheme. In parallel, prosecutors asked the court to keep alive a case against a Polymarket user accused of trading on nonpublic information. Key takeaways The CFTC issued consent orders imposing five-year trading bans on former Alameda Research CEO Caroline Ellison and FTX co-founder Zixiao “Gary” Wang. Alongside the trading bans, Ellison received a 10-year registration ban and Wang an eight-year registration ban, tied to their roles in the FTX collapse. In SDNY, U.S. prosecutors opposed a motion to dismiss filed by a soldier accused of making more than $400,000 on Polymarket using alleged nonpublic information. A Georgia judge ordered an indictment unsealed against Edward Zimbardi, who prosecutors allege ran a “Crypto Program” that used false promises to solicit investments. CFTC consent orders extend market restrictions after FTX On Tuesday, the U.S. District Court for the Southern District of New York (SDNY) entered consent orders connected to a 2022 enforcement action involving former Alameda Research CEO Caroline Ellison and FTX co-founder Zixiao “Gary” Wang, according to a report by Cointelegraph. The Commodity Futures Trading Commission (CFTC) required both individuals to accept five-year trading bans related to their involvement in the exchange’s collapse. The regulator also imposed longer-term restrictions on business activity: Ellison was ordered to serve a 10-year registration ban, while Wang received an eight-year registration ban. In remarks tied to the orders, CFTC enforcement director David Miller said the bans reflected “material assistance in the Commission’s FTX-related investigations.” The CFTC’s civil action is described as separate from criminal proceedings that addressed misuse of customer funds. In those criminal cases, Ellison was sentenced to two years in prison, while Wang received time served. For traders and compliance teams, these orders underscore how the CFTC can translate cooperation and investigatory conduct into concrete market-access limits—even after criminal outcomes are already underway. The practical effect is clear: individuals can face restrictions on trading and registration that persist well beyond any jail sentence timeline. Prosecutors fight to keep Polymarket insider-trading case alive Meanwhile, in SDNY, U.S. government lawyers filed an opposition to a motion to dismiss from Gannon Ken Van Dyke, a U.S. soldier accused of using nonpublic information to generate more than $400,000 through event contracts on Polymarket. Van Dyke was reportedly connected to the military operation involving the removal of Venezuelan President Nicolás Maduro in January. The defense motion, filed July 31, argued that the Commodity Exchange Act—central to three of the charges—was “ambiguous” about whether event contracts should be treated as “swaps” under the CFTC’s jurisdiction.