The United States Commodity Futures Trading Commission, or CFTC, is ordering the crypto exchange Kraken to pay citizens more than a million dollars in fines with allegations that the exchange is violating the Commodity Exchange Act.
In a Sept. 28 statement, the CFTC said the U.S.-based crypto exchange, Kraken-powered Ventures, has failed to register as a managed-futures commission merchant and is illegally trading margin retail products in digital assets. The exchange will have to pay a fine of $ 1.25 million for the order and “refrain from further violations of the Commodity Exchange Act,” under which CFTC acquires the power to apply it to commodities and futures trading.
Vincent McGonagall, acting director of CFTC, said the move is part of CFTC’s larger efforts to protect U.S. customers. “Margin, leverage or financed digital asset trading offered to retail U.S. customers must take place in properly registered and regulated exchanges in accordance with all applicable laws and regulations.”
The CFTC lawsuit alleges that Kraken “offered marginal retail commodity transactions in digital assets” to unqualified U.S. customers from June 2020 to July 2021 for 28 days. According to the CFTC, these measures are conducted illegally on behalf of the company because the transaction does not take place in a specific contract market.
“If payment is not made within 28 days, Cracken may unilaterally force the margin position to be liquidated,” the CFTC complained. “Cracken can initiate liquidation if the value of the deposit falls below a certain threshold percentage of the total outstanding margin. As a result, the actual distribution of purchased assets has failed.
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The task of application is seemingly small compared to the size of a major crypto exchange like Kraken – some estimates put the company at মূল্য 10 billion, with fines representing 0.0125% of that value. In contrast, CFTC and the Financial Crime Enforcement Network fined crypto derivatives exchange Bitmax $ 100 million in August.
Dan Barkovits, the current CFTC commissioner and soon-to-be general adviser to the Securities and Exchange Commission, has previously described former law enforcement measures in the crypto space as “aggressive”, but added that the company “does not want to seek more rights without more resources.” Will leave the CFTC and fill the two vacant commissioner seats in the agency by tapping U.S. President Joe Biden, Christine Johnson and Christy Goldsmith Romero.