Kraken will pay a fine of USD $ 1.2 million to resolve charges with the US CFTC

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Kraken will pay a fine of USD $ 1.2 million to resolve charges with the US CFTC By Hannah perez

The regulator charged Kraken with violating Commodity Exchange Law by offering crypto products on margin without having the required registration.


Kraken, one of the main exchanges cryptocurrency exchange, you will have to pay a fine of one million dollars to resolve the charges imposed by the main regulator of the options and future market of that country.

The Commodity Futures Trading Commission (CFTC) has filed and resolved charges against Kraken for not registering as a futures commission trading platform and offering margin transactions in cryptocurrencies. The regulatory agency reported the case in a release dated September 28.

According to official information, the order requires that Kraken pay a civil monetary penalty of $ 1.25 million and to cease and desist of new violations of the Basic Products Exchange Law (CEA).

This action is part of the CFTC’s broader effort to protect US clients.“Vincent McGonagle, Acting Chief Compliance Officer, said in the statement.

Kraken reaches an agreement with regulators

The CFTC charged the exchange for having Violated the Commodity Exchange Law between June 2020 and June 2021 by offering cryptocurrency products with margin without having a registration Designated Contract Market (DCM) or FCM. Kraken it offered margin trading of up to 5: 1, which the regulator called illegal.

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In the US, entities wishing to list or trade futures products must register as FCM, while a DCM license is required to offer futures products, he said. CoinDesk. It should be noted that in a margin operation cryptocurrency traders borrow money to invest and maintain their position in the market.

In an order issued by CFTC that was cited by CoinDesk, the regulator wrote:

During the relevant period, Kraken offered potential and current customers in the United States the ability to conduct retail commodity transactions on margin on its exchange. Margin trading was available to anyone in the US that Kraken approved for a user account.

The agreement between the exchange and the CFTC comes three months after Kraken discontinue your products with leverage. In June of this year, Kraken commented on limiting its margin products for clients in the US in an attempt to seek regulatory clarity.

Case suggests need for greater regulatory clarity

In addition to paying the fine and agreeing not to commit further violations, the terms of the agreement also include that the exchange waives its right to any court hearing or review. A spokesperson for Kraken quoted in this regard as quoted by the news media:

We appreciate that today’s agreement recognizes our cooperation and commitment on the matter. We are committed to working with regulators to try to ensure that the rules governing digital assets create a globally level playing field, one that allows the crypto space in the US to flourish, while protecting interests. people and the integrity of the industry“.

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Meanwhile, in a separate statement, the CFTC Commissioner Dawn Stump said the case outlined the need for more clarity of the Commission’s Final Interpretive Guide, issued in 2020, on retail commodity transactions involving certain digital assets.

In fact, she even admitted that it might be hard for Kraken and other crypto-exchanges comply with the law. The commissioner noted that, under current regulations, it was not clear how Kraken could be regulated as an FCM, and noted that it would be “without precedents”For a company to register as DCM and FCM at the same time. Stump commented in the statement:

It is not entirely clear how Kraken would be regulated as an FCM, because many of the Commission’s rules governing its regulation of traditional FCMs do not conform to Kraken’s role as an exchange..

Along these lines of ideas, the commissioner proposed opening a regulatory drafting procedure to provide clear “rules of the road”So that exchanges and other entities in the crypto industry can comply.

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Sources: CFTC, CoinDesk, The Block

Hannah Estefanía Pérez’s version / DailyBitcoin

Image from Unsplash

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