The U.S. Securities and Exchange Commission (SEC) announced on Monday that it has charged cryptocurrency exchange Poloniex, which had agreed to pay over $10 million as part of the settlement for running an unregistered digital asset exchange. According to the press release, the company facilitated the buying and selling of digital assets from July 2017 to November 2019 as securities.
However, the financial watchdog specified that Poloniex LLC did not comply with the rulings of running a licensed exchange. In fact, the SEC says the web-based trading platform met the criteria to be considered as an exchange, according to the securities laws. “The order finds that notwithstanding its operation of the Poloniex trading platform, which was available to U.S. investors, Poloniex did not register as a national securities exchange nor did it operate pursuant to an exemption from registration at any time, and its failure to do so was a violation of Section 5 of the Exchange Act,” the US SEC noted.
On the other hand, Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit, commented that the crypto company preferred to increase profits over compliance with federal securities laws. That said, Poloniex agreed to accept a cease and desist order issued by the SEC and paying a disgorgement of $8,484,313, prejudgment interest of $403,995, and a civil penalty of $1.5 million for a total of $10,388,309. It also includes establishing a fund to compensate the victims.
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“Poloniex attempted to circumvent the SEC’s regulatory regime, which applies to any marketplace for bringing together buyers and sellers of securities regardless of the applied technology,” Littman added.
Ontario Watchdog Warning on Poloniex
In May, the Ontario Securities Commission (OSC) accused the crypto exchange of breaking its securities laws. Although Poloniex is subject to the laws of the Republic of Seychelles, the Canadian regulator pointed out that the crypto exchange has never been registered with the OSC to offer trading services in Ontario.