The CFTC fines Bitcoin (BTC) exchange Kraken 1.25M

Wed 29 Sep 2021 ▪ 14h43 ▪ 2 min read — by James Taylor

The Commodity Futures Trading Commission (CFTC) ordered the American cryptocurrency exchange Kraken to pay a $1.25 million (£926,841) fine. The trading platform was accused of facilitating margined retail commodity transactions in digital assets to US customers.

The CFTC fined Kraken for offering margined retail commodity transactions in digital assets to US residents. According to the regulator, the crypto trading platform allowed American customers to use services, which can only be used when “properly registered and regulated in accordance with all applicable laws and regulations”.

The Commodity Futures Trading Commission has imposed a fine on Kraken and demanded that the trading platform refrain from further violations of the law.

The crypto exchange allowed Americans to trade margined assets back in June 2020. According to the CFTC’s acting director of enforcement, Vincent McGonagle, in order to offer such services, Kraken should have registered with regulatory authorities as a futures commission merchant (FCM), which it failed to do.

“Margined, leveraged or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”

According to the statement published by the CFTC, Kraken served as the sole margin provider and maintained physical and/or constructive custody of all assets purchased using margin for the duration of a customer’s open margined position. This put Kraken’s customers in a position where their transactions could be forcibly liquidated by Kraken if the value of the collateral dipped below a certain threshold percentage of the total outstanding margin.

Even though Kraken agreed to cooperate with the CFTC, the trading platform has neither acknowledged nor refuted the accusations. Kraken stated that it intends to follow the regulator’s rules to create “a level playing field” for traders across the globe.

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James Taylor

Trends are temporary. The blockchain isn’t a trend; it’s the future. I want to help as many people as possible understand it in a simple, clear and interesting way.


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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