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.
Jiang Zhuoer: BTC.Top Will Support the Camp Favored by a Majority of Hash Power in the Bitcoin Cash Hash War
Jiang Zhuo’er and his BTC.TOP , a major Chinese mining pool, will not take side in the upcoming Bitcoin Cash’s hash war between two competing camps, Bitcoin ABC and Bitcoin SV. Zhuo’er shared h
F2Pool Will Support the Mining of BCHABC and BCHSV after Bitcoin Cash Hard Fork
F2Pool, the sixth largest bitcoin mining pool in the world, announced on Tuesday that it will allow miners to mine both coins generated from the upcoming Bitcoin Cash hard fork after the chain split
IBM Says Blockchain Can Power 'Open Scientific Research' in New Patent Filing
A patent application published Thursday claims the process of conducting scientific research can benefit from the blockchain.
Led by a team at IBM's Watson Research Center, the patent application p
CFTC Fines Bitcoin Trader $1.1 Million for Crypto Fraud
The U.S. Commodity Futures Trading Commission (CFTC) has jailed a bitcoin trader and fined him over $1 million for running a fraudulent bitcoin and litecoin scheme.
According to a press release iss
Japanese Firms Claim Success in Marine Insurance Blockchain Trial
One of Japan's largest insurance companies, Tokio Marine & Nichido Fire Insurance, and IT firm NTT DATA have completed a trial that put the paperwork for marine cargo insurance claims on a blockchain.
Accenture Puts Software License Management on a Blockchain Platform
Global professional services giant Accenture has rolled out a new software license management application built with tech from distributed ledger startup Digital Asset.
Accenture announced in a pre
Singapore's Central Bank, SGX Develop Blockchain Settlement System
The Monetary Authority of Singapore (MAS) and the country's stock exchange, Singapore Exchange (SGX), have developed a settlement system for tokenized assets that can work across different blockchains
Colorado Regulators Crack Down on Four More ICOs
Colorado regulators took action against four ICOs Thursday, bringing the state's total number of cease-and-desist orders against crypto startups to 12.
The state's "ICO Task Force" rebuked Bitcoin