Regulatory Violations Lead to Massive Settlement
The U.S. Commodity Futures Trading Commission (CFTC) has ordered Falcon Labs, a cryptocurrency brokerage firm registered in Seychelles, to pay close to $2 million to settle regulatory violations. Falcon Labs failed to properly register with the regulator, resulting in a hefty penalty of $1,768,512. This marks the CFTC’s first action against an unregistered futures commission merchant (FCM).
Violation Details
- The CFTC has ordered Falcon Labs to cease and desist from operating as an unregistered FCM, specifically by providing U.S. individuals with access to digital asset derivatives trading platforms.
- Falcon Labs is required to pay $1,179,008 in disgorgement and a civil monetary penalty of $589,504.
CFTC Findings
According to the CFTC, Falcon Labs engaged in soliciting or accepting orders from customers based in the United States from around October 2021 to at least March 27th, 2023. The firm acted as an intermediary, facilitating customer trading on various digital asset exchanges, including institutional clients in the U.S. Falcon Labs provided direct access to exchanges by creating main accounts in its name and then establishing associated sub-accounts, without requiring or providing customer-identifying information for sub-account holders.
Recent Warning
Falcon Labs’ settlement comes shortly after CFTC Chair Rostin Behnam cautioned that the cryptocurrency industry could face another wave of enforcement actions within the coming months. Behnam suggested that the industry may experience heightened regulatory scrutiny and enforcement over the next two years.
Hot Take: Upholding Regulations in the Crypto Space
Cryptocurrency firms must adhere to regulatory guidelines to avoid hefty penalties and settlements. The CFTC’s action against Falcon Labs underscores the importance of proper registration and compliance with regulatory standards in the rapidly evolving crypto landscape. As the industry matures, regulatory enforcement is likely to increase to ensure the protection of investors and the integrity of the market.
Sources:
By
By
By
