Three DeFi Protocols Charged by CFTC: Breaching AML Rules, Operating Without Licenses

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Key takeaways:

  • CFTC has issued orders against three DeFi protocols—Opyn, ZeroEx, and Deridex—for not registering their derivative trading offerings.
  • These decentralized finance (DeFi) platforms are facing fines of $250,000, $200,000, and $100,000, respectively.

The US Commodity Futures Trading Commission (CFTC) has taken regulatory action against three major decentralized finance (DeFi) protocols: Opyn, 0x, and Deridex.

CFTC imposed substantial fines, with Opyn facing a $250,000 penalty, 0x receiving a $200,000 fine, and Deridex being fined $100,000.

In the complaint, CFTC accused Deridex and Opyn of failing to register as a swap execution facility (SEF) or designated contract market (DCM). 

They also failed to register as a futures commission merchant (FCM) and neglected to implement a customer identification program as part of their Bank Secrecy Act compliance, which is required for FCMs.

ZeroEx was charged for providing “2:1 leveraged exposure to digital assets like ether and bitcoin,” a service that can only be offered on a registered exchange in accordance with the Commodity Exchange Act (CEA) and CFTC regulations.

Developers of ZeroEx and its front-end operator, Matcha, noted that the leveraged product represented “less than 0.1% of Matcha’s trading volume since inception” in a tweet.

Ian McGinley, the director of enforcement at the CFTC, emphasized the need for DeFi platforms to proactively adhere to legal boundaries. 

He pointed out that there’s a misconception among DeFi operators that transactions become legal if executed through smart contracts, but that’s not the case. 

McGinley stated, “The DeFi space may be innovative, intricate, and constantly evolving, but the Division of Enforcement will adapt and vigorously pursue those running unregistered platforms that enable U.S. individuals to engage in digital asset derivative trading.”

Bankless co-host Ryan Sean Adams expressed a contrasting view, characterizing the CFTC’s enforcement action as yet another assault on the DeFi sector. In recent months, the regulator has targeted various cryptocurrency scammers involved in fraudulent activities.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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