CFTC Comes After DeFi Firms: 'Smart Contracts Don't Make Unlawful Transactions Legal'

The U.S. Commodity Futures Trading Commission (CFTC) has taken stringent action against three decentralized finance (DeFi) firms.

This latest development comes as the world of digital assets continues to draw attention, a focus that will also be explored in the upcoming Benzinga's Future of Digital Assets conference.

Opyn, Inc., ZeroEx, Inc., and Deridex, Inc. have all been charged by the CFTC for various violations, including the failure to register as mandated and for facilitating illicit transactions.

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These charges are connected to the firms' use of blockchain-based software protocols, commonly recognized as DeFi, which acted similarly to trading platforms.

The CFTC's enforcement has resulted in Opyn, ZeroEx, and Deridex being penalized with civil monetary fines of $250,000, $200,000, and $100,000 respectively.
Moreover, they've been ordered to halt any further violations of the Commodity Exchange Act (CEA) and related CFTC regulations.

“Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts. They do not," Ian McGinley, CFTC's Director of Enforcement, said. "The DeFi space may be novel, complex, and evolving, but the Division of Enforcement will continue to evolve with it and aggressively pursue those who operate unregistered platforms that allow U.S. persons to trade digital asset derivatives.”

The case against Opyn revolves around a facility that trades and processes swaps without the necessary registration.

Deridex faced similar charges, but was noted for not taking any steps to prevent U.S. users from accessing their protocol.

ZeroEx Inc.'s primary issue was with the trading of tokens that provided traders with approximately 2:1 leveraged exposure to assets like Ether ETH/USD and Bitcoin BTC/USD.

In light of their cooperation during the Division of Enforcement's investigation, the CFTC has acknowledged a reduction in the civil monetary penalties for each respondent.

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