CFTC Fines Offshore Crypto Exchange $100 Million
The Commodity Futures Trading Commission fined an offshore cryptocurrency trading platform $100 Million for failing to register as a futures commission merchant and ignoring anti-money laundering obligations.
The CFTC alleged that the platform operated in the U.S. by allowing U.S. customers to trade cryptocurrency derivatives through its interfaces and by acting as a counterparty. The platform operated a facility to trade swaps without being approved as a Designated Contract Market or Swap Execution Facility. Both the CFTC and FinCen also charged the firm with ignoring anti-money laundering know-your-customer due diligence obligations. The principals also face criminal charges for violations of the Bank Secrecy Act. A senior CFTC official warned: “This case reinforces the expectation that the digital assets industry, as it continues to touch a broader pool of market participants, takes seriously its responsibilities in the regulated financial industry and its duties to develop and adhere to a culture of compliance.”
It’s good that the CFTC disciplined one offshore derivatives exchange. But, how many more continue to operate without regard to any regulation? If the cryptocurrency industry truly wants wide acceptance, it must embrace serious regulation and supervision. Only when the retail public has confidence that the trading is safe, legitimate and transparent will crypto enjoy mass acceptance. We think the SEC should step in as the best regulator to bring confidence to the market.
Read CFTC press release here.