It was around this time that the exchange first contacted the CFTC, according to the order. The agency went on to say that the company was proactive in its cooperation.
This report has been updated.
Bitfinex will pay $75,000 in civil penalties, according to the order, and has moved to change its internal policies and avoid further violations of the Commodity Exchange Act.
“The Order finds that from April 2013 to at least February 2016, Bitfinex permitted users to borrow funds from other users on the platform in order to trade bitcoins on a leveraged, margined, or financed basis. The Order also finds that Bitfinex did not actually deliver those bitcoins to the traders who purchased them. Instead, Bitfinex held the bitcoins in deposit wallets that it owned and controlled, the Order states.”
"In response to these constructive discussions with the CFTC’s Division of Enforcement, BFXNA has made significant changes to the way in which US customers engage in financed trading on Bitfinex. Bitfinex remains committed to continually improving its customers’ experience while complying with applicable laws and regulatory requirements," the company wrote.
The full settlement order can be found below:
The settlement comes months after rumors circulated that the CFTC was investigating Bitfinex.
A futures commission merchant, according to the National Futures Association, is an entity that is authorized to sell or accept money for these kinds of financial products. According to the CFTC, Bitfinex did not register before offering this type of service.
Bitfinex settled charges that it offered illegal off-exchange financed retail commodities trading, as well as failed to register as a futures commission merchant. Bitfinex did not admit or deny the CFTC findings, the agency said today.
Hong Kong-based bitcoin exchange Bitfinex has settled with the US Commodity Futures Trading Commission (CFTC) following an investigation into its financed trading activities.
Images via Shutterstock, CFTC
In September, an anonymous tipster posted on social media about the then-rumored investigation, sharing a link to an email attributed to CFTC trial attorney Michael Frisch. Frisch’s name appears among the CFTC staffers listed on the agency’s press release regarding the settlement.
Bitfinex, which according to data from Bitcoinity is the largest bitcoin exchange by US dollar trade volume, did not immediately respond to a request for comment. In a statement posted to its website, the exchange outlined the settlement and said that it had moved to address what the CFTC was investigating.
The CFTC said a statement:
According to an order published today by the CFTC, the issues arose owing to how Bitfinex held functional control over funds tied to leveraged or margin trading on the platform. The CFTC said that because no actual commodities were delivered by Bitfinex to its customers – the private keys tied to the applicable bitcoins remained under the exchange’s control – it was in violation of the Commodity Exchange Act.
In September, the CFTC moved to assert its jurisdiction over bitcoin and digital currencies, classifying them as commodities under the Commodity Exchange Act.
US Congressman Drafts Bills to Aid Blockchain Development
U.S. Representative Tom Emmer wants to support the development and use of blockchain technology and cryptocurrencies.
To that end, the lawmaker announced a trio of blockchain-focused bills Friday,
Report Finds Cryptojacking Instances Jumped 400% In A Year
Instances of cryptojacking malware have jumped more than 400 percent since last year, a new report finds.
A collaborative group of cybersecurity researchers called the Cyber Threat Alliance (CTA) p
Bitmain CEO Announces New 7nm Bitcoin Mining Chip
The bitcoin mining industry is having an exciting couple of days.
Just a day after Bitfury revealed a new 14nm mining chip called the Bitfury Clarke, Bitmain has upped the ante with the announcemen
Brave Browser Is Using Civic's Blockchain Platform to Verify Publishers
Privacy-focused internet browser Brave will begin using blockchain identity startup Civic's verification services to ensure publishers are paid for their content with Brave's Basic Attention Token (BA
US Navy Launches Blockchain Research in Mission to Improve Tracking System
A U.S. Navy command is exploring the potential of blockchain technology in tracking aircraft parts.
The Naval Air Systems Command (NAVAIR) – which provides material support for aircraft and airborn
Reports: Taiwan Police Arrest Cody Wilson Following Assault Charges
Taiwan police have arrested Cody Wilson just days after Austin police accused him of sexually assaulting a minor, CBS Austin reported Friday.
Citing the Taiwan Criminal Investigation Bureau (CIB),
Tether's Impact on Bitcoin Price Not 'Statistically Significant,' Study Finds
The issuance of tether (USDT), the controversial cryptocurrency tied to the U.S. dollar's value, has had no meaningful impact on the price of bitcoin, an academic study has found.
The findings by D
Venezuela to Adopt Controversial Petro Token in Global Trade
Venezuela's President Nicolas Maduro is doubling down on his belief that the state-created petro token will help solve the country's chronic inflation and act to stabilize the economy.
During a TV