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The US commodities regulator CFTC fines a crypto company $250,000 and issues a cease and desist order

The Commodities Futures Trading Commission (CTFC) issues a $250,000 fine and a cease-and-desist order on a crypto firm.
According to a new press release, the commodities regulator is chiding crypto lending platform bZeroX and its founders Tom Bean and Kyle Kistner for allegedly offering leveraged and margined positions illegally.

The CTFC also says the company and its founders have also been caught “being involved in activities that only registered futures commission dealers (FCM) can undertake” and “not adopting a customer identification program as part of a banking secrecy compliance program, like.” it requires FCMs.”

The CTFC also simultaneously filed a federal civil enforcement action against Ooki DAOthe decentralized autonomous organization that succeeded bZeroX, for violating the same laws.

“The Order finds, and the Complaint alleges, that from about June 1, 2019 to about August 23, 2021, respondents Blockchain-based software protocol designed, deployed, marketed and made inquiries regarding a blockchain-based software protocol that accepted orders for margin and facilitated leveraged retail commodity transactions (functioning similarly to a trading platform)…

These transactions were unlawful because they had to take place in a specific contract market, but not…

As the Order states, and as alleged in the Complaint, on approximately August 23, 2021, bZeroX transferred control of the bZx Protocol to bZx DAO, which later renamed itself and currently operates as Ooki DAO.”

According to CTFC, the founders of bZeroX thought they could circumvent regulations by transferring control to the Ooki DAO, even going so far as tout their clients as such.

As Gretchen Lowe, Acting Director of Enforcement for the CTFC, noted in the press release,

“These actions are part of the CFTC’s broader effort to protect US customers in a rapidly evolving decentralized financial environment. Margined, leveraged, or funded digital asset trading offered to retail clients in the United States must be conducted on duly registered and regulated exchanges in accordance with all applicable laws and regulations. These requirements apply equally to companies with more traditional business structures as well as DAOs [decentralized autonomous organizations].”

Featured image: Shutterstock/Robert Kneschke/Natalia Siiatovskaia

Source: Crypto News Deutsch

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