The Kraken crypto exchange faces a heavy fine for providing illegal trading services in the United States.
In a statement on Tuesday, the Commodity Futures Trading Commission (CFTC) said it had issued an order requiring Kraken to pay $ 1.25 million in civil monetary penalties after finding that the exchange offered trading in retail commodities. with margin in Bitcoin (BTC) and other digital assets. to non-qualifying U.S. customers.
The order also requires that the exchange cease and desist from any other violation of the Commodity Exchange Act (CEA).
CFTC said that between June 2020 and July 2021, Kraken offered margin trading services while retaining sole custody of these assets. Customers were required to exit their positions and refund the exchange within 28 days. Otherwise, Kraken could liquidate its margin positions.
“Kraken could also initiate a forced liquidation if the value of the collateral falls below a certain threshold percentage of the total outstanding margin. As a result, the actual delivery of the purchased assets did not take place. “
The CFTC says these transactions were illegal because they did not take place in a designated contract market. The agency adds that Kraken also offered these services without registering as a futures merchant (FCM).
Acting Director of Law Enforcement Vincent McGonagle said the move was part of the CFTC’s efforts to protect U.S. customers.
“Margin, leveraged or funded digital asset trading offered to US retail clients must take place on properly registered and regulated exchanges in accordance with all applicable laws and regulations. “
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