CFTC Takes Action on Defi Platforms for Unlawful Derivatives Trading
The US Commodity Futures Trading Commission (CFTC) has filed orders against the operators of three decentralized finance (defi) platforms accused of violating commodity laws and for their involvement in unlawful digital asset derivatives trading.
Commodities Regulator Settles Charges Against Defi Protocols
The latest action initiated by the CFTC has brought California-based Opyn, Zeroex, and North Carolina-based Deridex under scrutiny. The regulator has filed orders and settled charges against them. These companies, which operate in the defi space, have been accused of violating key commodity laws.
Deridex and Opyn face allegations of failing to register as a swap execution facility (SEF) or designated contract market (DCM), along with neglecting to register as futures commission merchants (FCMs), according to the CFTC announcement published on Thursday.
Furthermore, they have failed to implement a customer identification program, which is a requirement for FCMs. In conjunction with Zeroex, they are also charged with offering leveraged and margined retail commodity transactions in digital assets.
The CFTC clarified that these crypto firms were running blockchain-based protocols and smart contracts that effectively functioned as trading platforms. These platforms claimed to offer users the opportunity to engage in decentralized transactions.
CFTC Slaps Civil Monetary Penalties on Opyn, Zeroex, and Deridex
As a result of the CFTC's actions, Opyn, Zeroex, and Deridex have been ordered to pay civil monetary penalties of USD 250,000, USD 200,000, and USD 100,000, respectively. They are also compelled to cease violating the Commodity Exchange Act (CEA) and CFTC regulations.
Ian McGinley, Director of Enforcement, emphasized, "Somewhere along the way, defi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts. They do not."
McGinley acknowledged the innovative but intricate nature of defi while underscoring the CFTC's commitment to adapt and vigorously pursue unregistered platforms enabling US residents to trade digital asset derivatives.
In a commendable move, the CFTC acknowledged in its press release the substantial cooperation of the defi firms in its investigation, resulting in reduced penalties. These actions transpire amid a broader crackdown on the cryptocurrency sector in the United States, where the CFTC collaborates with the Securities and Exchange Commission (SEC). The CFTC emphasized that its continued enforcement efforts in the defi space are part of its ongoing mission.
What is your take on the charges against the three defi platforms? Please share your thoughts and opinions in the comments section below.
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