SEC, CFTC clamp down on Bitcoin futures firm for securities violation
1Broker, a Bitcoin futures trading platform, has been charged with violating the securities law by engaging in a Bitcoin security swapped scheme. The charges were leveled by the U.S. financial regulators, the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC).
According to an SEC statement, charges were filed against the Marshall Islands-based 1pool Ltd or 1Broker, and its CEO Patrick Brunner for engaging in the sale of security-based swaps, which comes under the purview of futures, to domestic and international investors. The charges also claim that the company and its CEO failed to comply with “discretionary investment thresholds.” Investors could purchase the aforementioned swaps specifically with Bitcoin.
The regulatory compliance issues arose because 1Broker engaged in the sale of futures even though it was not registered as a dealer in the futures market. The SEC stated that the company, “failed to transact its security-based swaps on a registered national exchange, and failed to properly register as a security-based swaps dealer.”
“The SEC alleges that a Special Agent with the Federal Bureau of Investigation, acting in an undercover capacity, successfully purchased several security-based swaps on 1Broker’s platform from the U.S. despite not meeting the discretionary investment thresholds required by the federal securities laws,” the SEC statement added.
Shamoil Shipchandler, director of the SEC’s Fort Worth, Texas regional office, said that, “the SEC protects U.S. investors across a variety of platforms, regardless of the type of currency used in their transactions … International companies that transact with U.S. investors cannot circumvent compliance with the federal securities laws by using cryptocurrency.”
“Disgorgement plus interest” along with significant penalties will be imposed on both 1Broker and its CEO.
In addition, the CFTC laid charges on the company for failing to comply with anti-money laundering and supervisory provisions.
The Federal Bureau of Investigation (FBI) is also in on the issue, as it had reportedly seized the domain of the company, claiming a violation of money laundering and wire fraud laws. The report also mentioned that 1Broker has been “operating as an unregistered broker/dealer of securities” and, “operating as an unregistered futures commission merchant.”
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