The Commodity Futures and Trading Commission (CFTC) announced via a press release, that 1pool Ltd and its CEO and Founder, Patrick Brunner were fined $990,000 for engaging in illegal Bitcoin [BTC] transactions with customers based in the United States.
As per the federal body, the Marshall Islands-based international securities dealer and platform offered, “retail commodity transactions that were margined in bitcoin.” 1pool also wasn’t registered as a Futures Commission merchant (FCM), and did not meet the required anti-money laundering norms that were required.
A civil monetary penalty to the tune of $175,000 has to be paid by the platform and Brunner, in addition to a disgorgement of $246,000. Furthermore, the order also provides customers of the platform some relief, with the BTC held by them being compensated for.
The CFTC ordered Brunner and 1pool to pay their US customers the BTC held by the trading platform via their customer accounts. 1pool has to pay 93 Bitcoins worth $570,000 to the customers, coming up to a sum-total of $990,000.
James McDonald, the Director of Enforcement at the CFTC stated that not just non-compliant companies, but platforms that act as mediums will also see legal action taken against them.
“Intermediaries should take notice that they will be held accountable by the CFTC for failing to comply with registration requirements and failing to implement policies and procedures that are crucial in protecting U.S. customers and our markets. Through the Division’s Bank Secrecy Task Force.”
The CFTC added that this prosecution was rooted in a September 2018 complaint against 1pool lodged by the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI). According to the federal bodies, 1pool was behind 1broker.com, which violated federal law while engaging in security-based swaps funding via Bitcoin.
Additionally, the platform not only did not transact their swaps through a US-registered exchange, but it did not register as a security swaps dealer either. The SEC further stated that users of the platform were able to set up an account with just a username and an email address. Doing so, without providing any identifiable document, is illegal under customer identification regulations in the United States.
Several federal and state bodies within the United States have been ramping up their efforts to catch crypto-scammers. In May 2018, regulatory authorities in USA and Canada joined forces to crack down on ICO frauds as part of “Operation Crypto Sweep.” The state of Colorado took this operation by the scruff of its neck, tabling cease-and-desist orders against several initial coin offerings [ICOs] in November 2018 alone.
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