The United States Commodities regulatory body took action against three decentralised crypto exchanges.
The United States Commodities Futures Trading Commission (CFTC) is the second most dominant financial regulator in America, after the Securities and Exchange Commission (SEC). The CFTC agency has been a friendly regulatory body for the crypto sector and has taken action against crypto companies on behalf of clear rules.
On 8 Sep 2023, The CFTC agency announced that it charges three Defi protocols simultaneously over providing illegal digital assets trading services in the US jurisdiction.
Today @CFTC issued orders against operators of three DeFi protocols for offering illegal digital asset derivatives trading. Learn more: https://t.co/7YDbgC1Xl2
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— CFTC (@CFTC) September 7, 2023
These three Defi protocols are ZeroEx, Opyn, and Deridex. According to the press release, Deridex and Opyn failed to register as a swap execution facility (SEF) or designated contract market (DCM), as a futures commission merchant (FCM), and also failed to adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs.
All these Defi protocols allegedly offer leveraged and margin retail commodity transactions in digital assets in illegal ways.
People in the crypto sector are not shocked by this news, as the CFTC agency already confirmed that it will start to take action against the Defi crypto exchanges.
In May of this year, the CFTC chairman Rostin Behnam clearly said that all the Defi crypto exchanges are required to follow the rules in the US jurisdiction, no matter whether based on the decentralised code or something else.
At the time, he also said that the majority of the Defi crypto exchanges remain under the control of the protocol deployer or big institutions, which is contrary to the actual vision & claims of the Defi exchanges.
Now it will be interesting to see the next move by these Defi crypto exchange’s backend team, whether they will settle the case with a fine & quit the US market or will try to keep services available with alternative ways of mutual settlement with full registration with the CFTC.
For now, the CFTC agency ordered Opyn, ZeroEx, and Deridex to pay civil monetary penalties of $250,000, $200,000, and $100,000, respectively, and also ordered to cease and desist from violating the Commodity Exchange Act (CEA) and CFTC regulations.
Read also: JPMorgan developing crypto deposit token for cross border payment services
CFTC takes enforcement action against three Defi protocols
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