Poloniex Settles Accusations of Operating Unregistered Exchange
- The U.S. SEC has alleged that Poloniex provided its users with access to crypto deemed securities between July 2017 and November 2019.
- While the exchange neither confirmed or denied the accusations, it did agree to pay a fine of about $10.5 million.
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Cryptocurrency exchange Poloniex has been accused by the Securities and Exchange Commission (SEC) of violating securities trading regulations, the SEC said in a press release on 9 August.
According to the announcement, the U.S. SEC has alleged that Poloniex has been facilitating the buying and selling of crypto assets that have been deemed securities between July 2017 and November 2019. As the exchange had not registered as a national securities exchange, it has violated the Exchange Act. The chief of the SEC Enforcement Division’s Cyber Unit, Kristina Littman, said in a statement:
“Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange.”
The SEC has further accused the firm of trying to actively circumvent its securities regulations in order to increase its market share. During its investigation, the SEC found that around August 2017 employees had stated internally that Poloniex needs to be more “aggressive” in listing digital assets on its platform, even if they are considered securities under the Howey test.
While the exchange did not confirm or deny the accusations, it did agree to pay disgorgement of $8.5 million, prejudgment interest of $0.5 million and a civil penalty of $1.5 million, which will be used to establish a “Fair Fund” for the benefit of victims.
- 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.
- The U.S. regulator has alleged that the platforms offered unregistered securities to the general pubic in the form of the BNB token and BUSD stablecoin.
- Binance was also accused of failing to register as an exchange, and that it had comingled funds between its global and U.S. platforms.