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US Commodities Regulator CFTC Slaps Crypto Firm With $250,000 Fine, Issues Cease-and-Desist Order

US Commodities Regulator CFTC Slaps Crypto Firm With $250,000 Fine, Issues Cease-and-Desist Order

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The Commodities Futures Trading Commission (CTFC) slaps a crypto company with a $250,000 fine and a cease and desist order.

Crypto-lending platform bZeroX and its founders Tom Bean and Kyle Kistner are being reprimanded by the commodities regulator for allegedly illegally offering leveraged and margin positions, according to a new press release.

The CTFC also says the firm and its founders were also caught “engaging in activities that only registered futures commission merchants (FCMs) can perform” and “failing to implement a customer identification program as part of the Bank Secrecy Act compliance program. FCMs.”

The CTFC also concurrently filed a federal civil enforcement action against Ooki DAO, bZeroX’s successor decentralized autonomous organization, for violating the same laws.

“The Order states and the Complaint alleges that between approximately June 1, 2019 and approximately August 23, 2021, Defendants designed, implemented, marketed, and solicited a blockchain-based software protocol that accepted orders and facilitated margin and leveraged retail commodity transactions (operating similarly to a trading venue )…

These transactions were illegal because they had to take place in a designated contract market, but did not…

As stated in the order and alleged in the complaint, on or about 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 the CTFC, the founders of bZeroX thought they could circumvent the regulations by transferring control to the Ooki DAO and even advertised their clients as such.

As CTFC Executive Director Gretchen Lowe stated in a press release,

“These actions are part of the CFTC’s broader efforts to protect US consumers in a rapidly evolving decentralized financial environment. Any trading of margin, leveraged or funded digital assets offered to US retail customers must take place on duly registered and regulated exchanges in accordance with all applicable laws and regulations. These requirements apply equally to entities with a more traditional business structure as well as DAOs [decentralized autonomous organizations].”

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Disclaimer: The opinions expressed in The Daily Hodl are not investment advice. Investors should do due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that transfers and trades are at your own risk, and any losses are your responsibility. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets, and The Daily Hodl is not an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Featured image: Shutterstock/Robert Kneschke/Natalia Siiatovskaia



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