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Poloniex Exchange Settles Charges with SEC for $7.6 Million

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TL;DR

  • Poloniex, a cryptocurrency exchange, has agreed to pay $7.6 million in fines to the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) for allegedly facilitating trades in sanctioned jurisdictions and with sanctioned individuals.
  • The settlement resolves allegations that Poloniex violated U.S. sanctions laws by allowing users in sanctioned jurisdictions such as Iran, Cuba, and North Korea to trade on its platform and by failing to identify and block transactions involving individuals on OFAC’s Specially Designated Nationals and Blocked Persons (SDN) list.

Poloniex, a US-based cryptocurrency exchange, has agreed to pay $7.6 million to settle charges with the US Securities and Exchange Commission (SEC). The charges were related to the operation of an unregistered digital asset trading platform and the failure to file required reports to the regulator.

The settlement marks the latest crackdown by the SEC on cryptocurrency exchanges operating in violation of federal securities laws. The regulator has been taking an increasingly aggressive stance on crypto-related activities, as it seeks to protect investors from fraud and ensure compliance with securities laws.

Poloniex Fails to Register with the SEC

Poloniex, one of the largest cryptocurrency exchanges in the US, has agreed to pay $7.6 million to the SEC to settle charges related to its operation of an unregistered digital asset trading platform. The charges were filed against the exchange’s parent company, Circle Internet Financial, and Poloniex was accused of failing to register with the SEC as a securities exchange, as required by federal law.

The SEC’s order also found that Poloniex operated as an unregistered broker-dealer by facilitating trades of digital assets that were securities without being registered with the SEC. Furthermore, the exchange was charged with failing to file required reports to the regulator, such as Form ATS.

The settlement comes as the SEC has been stepping up its enforcement efforts in the cryptocurrency space. The regulator has been cracking down on unregistered initial coin offerings (ICOs) and other crypto-related activities that violate federal securities laws. The SEC has been actively seeking to protect investors from fraud and ensure compliance with securities laws.

Failure to File Required Reports

According to the SEC, Poloniex operated as an unregistered securities exchange between July 2017 and November 2019. The exchange allowed customers to buy and sell digital assets that were deemed securities without registering with the SEC. This violated federal securities laws, which require exchanges to register with the regulator.

Poloniex argued that it was not an exchange because it did not own the digital assets being traded on its platform. However, the SEC rejected this argument, stating that Poloniex was facilitating trades of securities and was therefore required to register with the regulator.

In addition to operating as an unregistered exchange, Poloniex was also charged with failing to file required reports with the SEC. The exchange failed to file a Form ATS, which is required by federal law for alternative trading systems to operate lawfully.

Poloniex argued that it was not required to file Form ATS because it was not an exchange. However, the SEC rejected this argument as well, stating that Poloniex was operating as an alternative trading system and was therefore required to file the form.

Conclusion

Poloniex’s settlement with the SEC highlights the regulator’s increasing focus on cryptocurrency exchanges and their compliance with federal securities laws. The $7.6 million settlement serves as a warning to other exchanges that may be operating in violation of securities laws.

While the cryptocurrency industry is still largely unregulated, the SEC’s actions demonstrate that the regulator will take action against those who violate federal securities laws. As the cryptocurrency market continues to grow, it is important for exchanges to comply with federal securities laws to ensure the protection of investors and the integrity of the market.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Haseeb Shaheen

As a Web Researcher and Internet Marketer, Haseeb Shaheen delivers relevant valuable content for audiences. He focuses on financial and crypto market analysis, as well as technology-related areas that help people change their lives.

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