CFTC and SEC File Charges Against Swiss Securities Dealer
- XBT Corp., which operates under the name First Global Credit, allegedly sold unregistered security-based swaps for bitcoins.
- The company will have to pay the SEC more than $130,000 in fees and disgorgement, while the CFTC has charged it an additional $100,000.
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Two United States regulators have filed charges against XBT Corp. on the same day, claiming the company failed to register as a Futures Commission Merchant (FCM).
On 31 October the U.S. SEC published a press release, alleging that the Switzerland-based securities dealer, which operates under the name First Global Credit, sold security-based swaps for bitcoins, without complying to registration and exchange requirements for such such trades.
The Commodity Futures Trading Commission (CFTC) also filed similar charges against the company on the same day.
The charges against the firm state that it solicited or accepted futures orders from U.S. customers between March 2016 and July 2017, accepting Bitcoin (BTC) for margin trades.
Reportedly the company tried to use different terminology for the investments it offered, such as “Bitcoin Asset Linked Notes”.
David Peavler, regional director of the SEC’s Fort Worth regional office, said:
“Federal securities laws impose specific requirements for offering and selling security-based swaps to retail investors in the U.S. These obligations cannot be avoided merely by describing the swap transaction by a different name or funding it with digital currencies.”
As part of the settlement with the SEC, the company will pay more than $130,000 in fees and disgorgement. The CFTC’s complaint further requires that the company pays an additional $100,000 penalty and disgorge gains for violating the Commodity Exchange Act, and to desist from future violations.
James McDonald, the CFTC Director of Enforcement, commented:
“This case demonstrates that the CFTC will hold intermediaries accountable if they solicit or accept orders without properly registering with the agency. This case also underscores that the Commission will continue working with our law enforcement and regulatory partners to ensure the integrity of our markets.”
- During an interview with FT, CEO Brian Armstrong said that before the lawsuit a SEC staff member had said that all crypto except BTC was security, and should be delisted.
- When asked how he came to that conclusion, the SEC staff member reportedly said “we’re not going to explain it to you, you need to delist every asset other that Bitcoin”.
Coinbase CEO Brian Armstrong appears on stage at the 2014 TechCrunch Disrupt Europe/London, at The Old Billingsgate on October 21, 2014 in London, England. Anthony Harvey/Getty Images for TechCrunch
- The U.S. SEC, CFTC, and FTC have all filed separate lawsuits against bankrupt crypto lender Celsius and its former CEO Alex Mashinsky, charging them with multiple counts of fraud.
- Mashinsky was also arrested in New York on Thursday, and later charged by the Department of Justice with securities fraud, commodities fraud, and wire fraud.
- CFTC investigators have reportedly concluded that Celsius mislead investors and failed to register with the regulator, while its former CEO Alex Mashinsky broke CFTC regulations.
- If the majority of CFTC commissioners agree with the investigators’ findings, the regulator could file a lawsuit against Celsius and its former CEO as early as this month.