CFTC fined Kraken $ 1.25 million for allegedly illegal delivery

The U.S. Commodity Futures Trading Commission (CFTC) orders the Kraken cryptocurrency exchange to pay over $ 1 million in civil fines related to alleged violations of the Commodity Exchange Act.

28 statement, the CFTC said that the US-based crypto exchange Kraken – which goes by the name Payward Ventures – has not registered as a futures commission dealer and illegally offers margin commodity transactions for the retail of digital assets. The order requires the exchange to pay a $ 1.25 million fine and “End and Cease Violations of the Commodity Exchange Act,” the law that gives the CFTC most of the enforcement powers for trading in goods and services Futures contracts.

“This move is part of the CFTC’s broader effort to protect US customers,” said Vincent McGonagle, acting director of enforcement for the CFTC. “Trading in margined, leveraged or funded digital assets offered to US individual customers must be conducted on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”

In the CFTC case, it is alleged that Kraken “offered digital asset margin commodity transactions” to unqualified US customers between June 2020 and July 2021. Jobs in 28 days. According to the CFTC, these acts represent the company operating illegally as transactions do not take place in the designated contract market.

The CFTC claims, “If the refund is not made within 28 days, Kraken can unilaterally force the liquidation of the margin position. “Kraken can also initiate a compulsory liquidation if the value of the collateral falls below a certain threshold of the total outstanding margin. As a result, the actual delivery of the purchased property was not possible. “

Related: The US crypto exchange Kraken will begin listing on the stock exchange in 2022

Enforcement seems small compared to the size of a large crypto exchange like Kraken – some estimates put the company at a valuation of $ 10 billion, with fines accounting for 0.0125% of the price. In contrast, the CFTC and the Financial Crimes Enforcement Network fined the crypto derivatives exchange BitMEX $ 100 million in August.

Dan Berkovitz, current CFTC commissioner and future general counsel to the Securities and Exchange Commission, previously described the ex’s enforcement actions in the crypto space as “aggressive” but also said the agency is “not necessarily looking for more authority.” without additional resources. Berkovitz is leaving the CFTC in October while US President Joe Biden has invited Kristin Johnson and Christy Goldsmith Romero to fill two of the agency’s vacant commissioner seats.