CFTC Files and Settles Charges Against Falcon Labs; Firm Penalized $1.8 Million
Summary:
The Commodity Futures Trading Commission (CFTC) has both filed and settled charges against cryptocurrency brokerage Falcon Labs, a subsidiary of FalconX, for approximately $1.8 million. The charges relate to the firm's failure to register as a futures commission merchant and inappropriate facilitation of access to digital asset exchanges. In the settlement, FalconX is required to stop servicing U.S. customers and to pay about $1.2 million in restitution and $600,000 as a civic penalty. The regulator noted FalconX's considerable cooperation leading to a reduced fine. In the future, crypto operations in the U.S. can anticipate more enforcement actions, based on the CFTC warning.
The United States regulatory body for commodity futures, the Commodity Futures Trading Commission (CFTC), announced it had both brought and settled a case against Falcon Labs, a cryptocurrency brokerage company. The company was fined approximately $1.8 million for restitution and penalties. Falcon Labs, a FalconX subsidiary, was accused of negligently providing access to digital asset exchanges without proper registration as a futures commission merchant. The settlement stipulated that FalconX must discontinue offering services to U.S. customers and compensate approximately $1.2 million in restitution and $600,000 in civic monetary penalties. Ian McGinley, the Enforcement Director, stated that the CFTC's enforcement initiative will not withstand digital asset exchanges that neglect to register with the CFTC or abide by their regulations intended to uphold derivatives market integrity. The CFTC is escalating its fight against these violations by levying charges against an intermediary for facilitating inappropriate access to such exchanges for the first time. The settlement accuses FalconX of facilitating orders for digital asset derivatives for U.S. customers using their 'Edge' product from October 2021 to March 2023. The CFTC reports that the brokerage company willingly enhanced its procedures following its lawsuit involving Binance and previous CEO Changpeng Zhao. In that instance, a settlement of $4.3 billion was reached in November 203 in conjunction with other U.S. authorities. The regulator cited FalconX for their "considerable cooperation and rectification", leading to a reduced penalty. The CFTC's order allows the firm to neither admit nor deny the findings or conclusions of the regulator. Attempts to reach FalconX for comment were unsuccessful by the publication deadline. On May 6, Rostin Behnam, Chair of the CFTC, warned that U.S. operational crypto companies could anticipate "another surge of enforcement actions" within the forthcoming two years. In 2023, the commodity regulator filed 47 enforcement actions against crypto firms. US regulatory agencies are increasingly cracking down on cryptocurrency-related offenses.
Published At
5/14/2024 12:05:00 AM
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