Kraken, one of the largest cryptocurrency exchanges, received a fine of $1.25 million. Commodity Futures Trading Commission Imposed “Civil fine“Plus stop and stop”Further violation of the Commodity Exchange Act (CEA)“September 28. According to the CFTC, Kraken provides commodity trading margins for U.S. retail customers who are not suitable to use these products.
However, for a company as large as Kraken, the fine seems to be a slap in the face. They are a private company and their annual revenue is not in the public domain, but they raised $100 million in 2019 at a valuation of $4B. According to reports, Kraken sought a valuation of US$20B after the IPO this year, but this did not happen. For a company of this size, the $1.25 million fine is not much, but perhaps the penalty is just right.
ETH price chart on Kraken | Source: ETH/USD on TradingView.com
What exactly did Kraken do?
Violations occurred approximately between June 2020 and July 2021. At that time, “Kraken operates illegally as an unregistered FCM. “And, what does the unregistered futures commission merchant provide? Well, American customers can use margin to obtain digital assets, and Kraken provides said assets or fiat currency”Payment of assets to the seller.“Of course, users must provide collateral and pay for the received assets within 28 days.
If they don’t pay within the stipulated time,”Kraken can unilaterally force liquidation of margin positions.“They can also be liquidated”If the value of the collateral falls below a certain threshold percentage of the total outstanding margin.In short, Kraken sells derivatives and provides credit without being registered as an FCM. “These transactions are illegal because they are required to be carried out on the designated contract market and not carried out.“
The CFTC Acting Director of Enforcement, Vincent McGonagle, stated in the press release:
“This action is part of the CFTC’s broader efforts to protect U.S. customers. Margin, leverage, or financing digital asset transactions provided to U.S. retail customers must be conducted on appropriately registered and regulated exchanges in accordance with all applicable laws and regulations.”
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In the past few months, Kraken representatives have worked hard on the traditional financial system.From their director Dan Held called the whole thing “poster,” CEO Jesse Powell predicts Cryptocurrency companies will replace them Within ten years. In Held’s tweet, he attached a chart showing how the integration of the U.S. banking industry has progressed over the years. Today, only four agencies control all this:
— Dan Hold (@danheld) July 1, 2021
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For his part, on the last day of March, Powell told Bloomberg:
“Most of these people have not done work in the past ten years to ensure that they master the latest encryption technology. Therefore, I think that in the next ten years, these traditional businesses are simply replaced is a very real risk.”
In recent news, Kraken is trying to re-enter the European market. The company has obtained an operating license from the Financial Conduct Authority of the United Kingdom. Therefore, since Brexit took place, they must find a new home for their license.when NewsBTC reported the news, we say:
“Powell added that Kraken Exchange seeks to re-enter Europe before the end of 2021. It will issue such licenses with possible countries such as the Republic of Ireland, Malta and Luxembourg. However, as negotiations continue, they have not yet set an official date .”
Will the $1.25 million fine imposed by the CFTC undermine these or any of Kraken’s plans? of course not. Not by a long shot.
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