The Commodity Futures Trading Commission has filed charges against Payward Ventures, Inc, doing business as one of the largest digital asset exchanges in the US, Kraken, for illegally offering margined retail commodity transactions in digital assets, such as Bitcoin.
The US watchdog has settled the charges with the exchange by imposing a $1.25 million fine on Kraken and issuing a cease-and-desist order from further violations.
Founded in 2011, Kraken is one of the oldest and biggest crypto exchanges in the world. However, the company is not a registered futures commission merchant (FCM) and therefore is not allowed to offer margined products in the US.
Acting Director of Enforcement Vincent McGonagle, said:
This action is part of the CFTC’s broader effort to protect U.S. customers. 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 CFTC, Kraken offered margined retail commodity transactions in digital assets to US customers between June 2020 and July 2021. The company provided the digital asset or fiat currency to pay the seller for the asset when a customer took a margined position. Kraken required them to exit the position or repay the assets within 28 days. If repayment was not made within that period, the exchange liquidated the positions.
