U.S. Commodities Regulator Says Penalty Is One Step to Protect American Investors
Kraken, one of the United States’ leading cryptocurrency exchanges, has been fined by the Commodity Futures Trading Commission (CFTC) for offering unregulated crypto investment products.
According to an order issued by the commission on Tuesday, September 28, Kraken unlawfully provided U.S. customers access to crypto products in violation of regulatory requirements.
“The commission’s order states that from approximately June 2020 through July 2021, Kraken offered margined retail and commodity trading in digital assets to U.S. customers who were not eligible contract participants,” the regulator said in a press release.
The commission found that the exchange was not “registered as a futures commission merchant” and that it had exposed users to margined trading in a manner inconsistent with U.S. commodities market rules.
As a result, Kraken must pay a $1.25 million fine and “cease and desist from further violations of the commodity exchange act,” the commission added.
Vincent McGonagle, Director of Enforcement at the commission, said the actions against Kraken are part of the regulator’s mandate to protect U.S. customers. He emphasized that any firm or exchange offering margined or leveraged trading must ensure it is properly registered and that all products are regulated in accordance with the law.
Kraken has reached a settlement with the commission and is expected to pay the specified fine within 30 days.
The exchange reportedly plans to continue cooperating with regulators to ensure compliance and to help clarify industry rules.
CoinDesk reported that Kraken does not intend to challenge the matter in court.