CFTC hits Kraken with $1.25M fine over illegal crypto products

The CFTC says the penalty is one of the actions it’s taking to protect US investors

Kraken, one of the leading US-based cryptocurrency exchanges, has been fined by the Commodity Futures Trading Commission (CFTC) for offering unregulated crypto investment products.

As per an order the CFTC issued on Tuesday 28 September, Kraken illegally offered US customers access to crypto products, breaching regulatory guidelines.

“The CFTC’s order finds that from approximately June 2020 to July 2021, Kraken offered margined retail commodity transactions in digital assets to U.S. customers who were not eligible contract participants,” the regulator said in a press release.

The CFTC noted that the exchange had failed “to register as a futures commission merchant (FCM)” and that it exposed users to margined trading, contrary to US commodity markets’ requirements.

Kraken is therefore required to pay $1.25 million as a fine and to “cease and desist from further violations of the Commodity Exchange Act (CEA),” the Commission added.

According to CFTC acting director of Enforcement Vincent McGonagle, the action against Kraken is part of the regulator’s mandate aimed at protecting US customers. He also added that any firm or exchange provider seeking to offer margined or leveraged trading needs to ensure they are registered and that all products are regulated as required under the law.

Kraken has moved to settle with the CFTC, with the crypto platform now expected to pay the stipulated fine within 30 days.

The exchange is also reportedly seeking further collaboration with the regulator in ensuring compliance as well as clarity within the space.

According to a CoinDesk report, Kraken will not pursue a court review of the matter.

Source: https://coinjournal.net/news/cftc-hits-kraken-with-1-25m-fine-over-illegal-crypto-products/