The largest cryptocurrency exchange, Kraken, received a 1.25 million fine. Commodity Futures Trading Commission Forced “Citizen fines“Plus a break and refrain from”Further violation of the Commodity Exchange Act (CEA)28 September. According to the CFTC, Kraken provided margins for product transactions to retail clients in the United States who were not fit to use these products.
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But the fine seems like a slap on the wrist of a huge company like Kraken. They are a private company and their annual revenue is not in the public domain, but they raised 100 100 million in 2019 with a $ 4B valuation. It happens that for a company of that size, the 1.25 million fine is no more, but perhaps appropriate for penalty violations.
ETH price chart on Kraken | Source: ETH/USD on TradingView.com
What exactly did Kraken do?
The breach occurred between June 2020 and July 2021. During that time, “Cracken illegally operated as an unregistered FCM. And, what did the unregistered Futures Commission merchant offer? That’s right, U.S. consumers can acquire digital assets using margins, and Kraken says assets or fiat money. “To pay the seller for the property.“Of course, users have to pay a deposit and pay within 28 days for the assets received.
If they do not pay within the stipulated time,Cracken can unilaterally force the margin position to be liquidated.“They can also liquidate”If the value of the deposit falls below a certain threshold percentage of the total outstanding margin.“In short, Kraken was selling derivatives without registering as an FCM and increasing credit.”These transactions were illegal because they had to be in a specific contract market and did not happen.”
Vincent McGonagall, CFTC’s acting director of enforcement, said in a press release:
“The move is part of CFTC’s broader efforts to protect US consumers. Margin, leverage or financed digital asset trading offered to retail U.S. customers must be in properly registered and regulated exchanges in accordance with all applicable laws and regulations.
The latest games on the cryptocurrency exchange
Over the past few months, Kraken representatives have tightened their grip on the conventional financial system. From their director Dan called the whole thing. “To make posters, ” CEO Jesse Powell predicts that Cryptocurrency companies will replace them Within a decade. In Held’s tweet, he attached a graphic that showed how the integration of the U.S. banking sector progressed year after year. Today, only four organizations control it:
– Dan Held (@Dunheld) July 1, 2021
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On his behalf, on the last day of March, Powell told Bloomberg:
“Most of these guys haven’t worked in the last ten years to make sure they stay current with crypto technology. So I think there is a very real risk that in the next ten years, that legacy will simply be replaced for business.
In more recent news, Kraken is trying to re-enter the European market. The company was licensed to operate through the UK Financial Conduct Authority. So, since Brexit happened, they have to find a new home for their license. When NewsBTC has covered the news, We said:
Powell added that the Kraken exchange wants to re-enter Europe by the end of 2021. It will go with the Republic of Ireland, Malta and Luxembourg among the possible countries to issue such licenses. However, they have not yet set an official date because negotiations are still ongoing.
Will the এ 1.25 million fine imposed by the CFTC throw a wrench at them, or any plan by Kraken? Of course not. Not long shots.
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