The U.S. Commodity Futures Trading Commission (CFTC) stated on Tuesday that it had issued an order filing and resolving charges against Payward Ventures, Inc, the parent company of Kraken, a digital currency trading platform based in the United States.
According to the statement, Kraken will be fined $1.25 million for unlawfully providing margined retail commodities transactions in digital assets, including Bitcoin, and for failing to register as a futures commission merchant (FCM) properly.
“This action is part of the CFTC’s broader effort to protect U.S. customers,” said Acting Director of Enforcement Vincent McGonagle. “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.”
Kraken is one of the first U.S.-based exchanges to pioneer the development of the cryptocurrency ecosystem. With its deep roots as a key participant in the field, Kraken’s CEO, Jesse Powell, recently emphasized the importance of exchanges avoiding the Securities and Exchange Commission’s (SEC) radar in its ongoing litigation with Ripple Labs Inc over the security status of the XRP token. However, given the difficulties of crypto exchanges with American authorities, it’s a surprise that Kraken was fined by the CFTC, despite the trading platform’s attempts to avoid regulatory issues.
The CFTC also fined BitMEX, a Seychelles-based trading platform, $100 million in August to resolve identical allegations stemming from the fact that the exchange enabled U.S. users to trade unregistered derivatives products. In addition, the CFTC warned that all kinds of margin trading without appropriate registration are unlawful and would result in increased penalties, regardless of the exchange’s justification.