The United States Commodity Futures Trading Commission (CFTC) is calling on the Kraken crypto exchange to pay a civil fine of more than $ 1 million for allegedly violating the Commodity Exchange Act.
In a September 28 statement, the CFTC called US-based Kraken, trading under the name Payward Ventures, is not registered as an intermediary futures trader and illegally trades in margined retail goods, especially digital assets. The order requires the exchange to pay a fine of $ 1.25 million and to “cease and stop the violation of the Commodity Exchange Act.”
Vincent McGonagle, Acting Director for Enforcement of the CFTC states:
“This move is part of the CFTC’s broader effort to protect US customers. Trading in margin, leveraged, or funded digital assets offered to US retail clients must be on properly registered and regulated exchanges in accordance with all applicable laws and regulations.
The CFTC claims Kraken illegally provided services to unauthorized U.S. customers from June 2020 through July 2021. According to the CFTC, these acts represent the company operating illegally as transactions do not take place in the designated contract market.
“If the fine is not paid within 28 days, Kraken can unilaterally force the liquidation of margin positions. Kraken can also initiate a forced liquidation if the value of the collateral falls below a certain percentage of the total outstanding margin. As a result, the actual distribution of the acquired assets was not possible, ”the CFTC said.
Enforcement seems small compared to the size of a large crypto exchange like Kraken – some estimates put it at a valuation of $ 10 billion, with fines a mere 0.0125% of the value. In contrast, the Financial Crimes Enforcement Network and the CFTC fined the crypto derivatives exchange BitMEX $ 100 million in August.
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According to Cointelegraph