Why Did The CFTC Fine Crypto Exchange Kraken $1.3M?

The U.S. Commodity and Futures Trading Commission (CFTC) has imposed a $1.25 million fine on U.S.-based crypto exchange Kraken.

What Happened: In a statement issued earlier this week, the CFTC alleged that Kraken had illegally offered margined retail commodity transactions in digital assets, including Bitcoin BTC/USD, and failed to register as a futures commission merchant (FCM).

As per the order, Kraken will be required to pay $1.25 million in “civil monetary penalty” and to cease and desist from further violations of the Commodity Exchange Act (CEA).

Kraken was founded in 2011 and is the largest U.S.-based crypto exchange after Coinbase Global Inc COIN.

Based on the CFTC’s allegations, Kraken reportedly offered margined retail commodity transactions in digital assets to U.S. customers who were not eligible contract participants between June 2020 and July 2021.

“This action is part of the CFTC’s broader effort to protect U.S. customers,” said CFTC Acting Director of Enforcement Vincent McGonagle.

“Margined, leveraged or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”

Kraken isn’t the only crypto company on the CFTC’s radar. On Thursday, the regulator charged 14 other crypto companies with failing to register as FCMs or falsely claiming to be registered.

“Today’s actions reflect the CFTC’s dedicated efforts to aggressively root out bad actors falsely claiming to hold legitimate registrations and protect the trading public,” said McGonagle.

Price Action: In the last 24-hours, the crypto market recorded a 1.17% increase in overall market cap which stood at $1.9 trillion at press time Thursday. The leading digital asset Bitcoin BTC/USD was trading at $43,089.77, up 2.49%.

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