CFTC has fined Kraken $ 1.25 million for offering unregulated margin trading
The CFTC fined Kraken $ 1.25 million for offering unregulated margin trading like illegal crypto products, so we read more on our latest crypto news today.
According to a statement from the CFTC, Kraken has given US customers access to products that they were supposedly banned from. The order requires Kraken to pay a civil fine of $ 1.25 million to end and remediate further violations of the Commodity Exchange Act. The exchange was founded in 2011 to enable US customers to trade margin products between June 2020 and July 2021 and has reportedly not registered as a commission trader future. Vincent McGonagle, director of rights enforcement for the CFTC, said the company must register with regulators in order to offer these products:
“Trading in margined, leveraged or funded digital assets offered to retail customers in the United States must be on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”
He added that the move was part of a wider effort by the CFTC to protect its customers, while trading in margin goods in retail digital assets was being rejected by regulators as the risk of liquidation increased. Kraken, as the primary margin provider, holds all purchased assets on margin for the duration of the open margin position as stated. It added that traders will not withdraw margin assets for 28 days because Kraken was holding them. In addition, the exchange can initiate a forced liquidation if the value of the collateral falls below a certain threshold value of the outstanding margin. Kraken agreed with the CFTC’s demands without admitting or denying them, and the agency noted the company’s cooperation.
Kraken said in a statement it was committed to working with regulators to ensure rules on the asset create a level playing field for traders worldwide. In April of this year Kraken has CEO Jesse Powell warned the crypto industry would be subject to stricter regulations, telling CNBC:
“I hope US and international regulators do not have a narrow opinion on this matter. Some other countries, especially China, take crypto very seriously and have a very long-term perspective. “
When the CFTC fined Kraken, it was only added to its list of legal issues because the exchange was ordered by a California court to provide the Internal Revenue Service with information about users who made cryptocurrency transactions costing $ 20,000 from 2016-2020 or have made more.
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