CFTC fines crypto firm $250K for illegal crypto trading

• The CFTC penalties against bZeroX, its founder, and its successor Ooki DAO are related to illegal offering of off-exchange crypto trading and bank secrecy law violations.
• The Ooki DAO was renamed to the bZeroX protocol and operated.
• Regulators say the action is aimed at protecting U.S. retail investors amid crypto’s rapidly growing market.

The Commodity Futures Trading Commission (CFTC) has fined cryptocurrency lending platform bZeroX $250,000 and issued a cease and desist order for illegal operations in violation of the Commodity Exchange Act, CFTC regulations, and the Bank Secrecy Act. issued.

Fines and orders were also filed against bZeroX founders Tom Bean and Kyle Kistner, resulting in a settlement, the agency said. press release.

“These measures are part of the CFTC’s broader efforts to protect U.S. customers in a rapidly evolving decentralized financial environment.said Gretchen Lowe, Acting Executive Director of the CFTC.

bZeroX violated registration rules

According to regulators, the cryptocurrency firm operated without the required registration and illegally offered leveraged and margin commodity trading related to digital assets. As such, the platform offered services that could only be undertaken by properly registered futures commission merchants (FCMs).

“Any margined, leveraged or loaned digital asset trading offered to U.S. retail customers must be conducted on a properly registered and regulated exchange in accordance with all applicable laws and regulations. These requirements apply equally to entities with more traditional business structures as well as DAOs.added Rowe.

The CFTC also accused bZeroX of violating the Bank Secrecy Act by not adopting and implementing the KYC program required of FCM.

Complaints were also leveled against bZeroX’s successor, the Ooki DAO, a decentralized autonomous organization.

ICYMI: CFTC fines bZeroX, LLC and its founder $250,000, and charges its successor Ooki DAO for offering illegal off-exchange digital asset trading, violating registration, and complying with bank secrecy laws. prosecuted for negligence. https://t.co/dG7IeKKJtn

CFTC (@CFTC) September 23, 2022

According to the CFTC, orders related to the development, deployment, and marketing of the blockchain-based software bZx protocol from around June 1, 2019 to around August 23, 2021 were changed to Ooki DAO.

Therefore, the regulator said it has filed a civil enforcement suit against the Ooki DAO seeking prohibition, exploitation, fines and an injunction from trading.