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.”