CFTC Penalizes 12 New York Crypto Derivatives Firms for Avoiding Registration

The Commodity Futures Trading Commission (CFTC) has fined 12 cryptocurrency options firms located in New York for failing to enroll with the regulatory organization. The CFTC said in a media release on September 29 that it is penalizing 14 companies altogether, with the 12 crypto-centric enterprises all being charged for failing to enroll as futures commission merchants (FCMs).

All of the companies were “ostensibly headquartered in New York.” The other two businesses are accused of posting false information regarding their National Futures Association (NFA) membership and CFTC registration. Among the cryptocurrency options providers mentioned are virtually unknown names like Bitfxprofit, Star FX Pro, Smarter Signals, and BinanceFx Trade, the latter of which, contrary to the title, is unconnected with the major global cryptocurrency exchange Binance.

“Today’s actions demonstrate the CFTC’s committed determination to vigorously seek out unscrupulous actors fraudulently claiming to possess valid licenses and safeguard the trading public,” stated Acting Director of the Division of Enforcement Vincent McGonagle.

Firms that provide commodity exposure via futures contracts must enroll with the CFTC as an FCM. The commission oversees the range of derivatives markets, which encompasses futures contracts, options, and swaps, but just not the spot markets for regular traders.

The derivatives market watchdog has had a hectic week after slamming the compliance pedal down on Kraken on Tuesday, directing the company to pay $1.25 million in civil fines for alleged Commodity Exchange Act breaches. Significantly, after his retirement from the CFTC in October, Dan Berkovitz will join the Securities and Exchange Commission (SEC) as general counsel.

Berkovitz is said to be working with SEC head Gary Gensler on a “policy roadmap that would improve investor safety.” BitMEX decided to pay a $100 million civil fine to the CFTC and FinCEN in August for “unlawfully running a cryptocurrency trading platform and anti-money laundering violations.”