Reminding retail trading firms that they should never offer their services to Americans without proper regulatory approval, this Monday the Commodity Futures Trading Commission (CFTC) announced that it had fined the owner of a cryptocurrency brokerage almost a million dollars.
According to a statement released by the CFTC, Patrick Brunner, the owner of 1pool, was offering margined trading in bitcoin to US citizens.
The US regulator said the Brunner did not register as a futures commission merchant and failed to put anti-money laundering procedures in place. 1pool was also, it appears, acting as a counterparty to much of the trading that took place on the platform.
Some fines issued by the US regulators to firms operating in the cryptocurrency space have been harsh. Two Texas-based cryptocurrency mining operations, for example, were given $25,000 fines for not registering under securities laws when it wasn’t even clear that they were dealing in securities.
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Conversely, some fines, like the one given to a Californian guy who was keeping thousands of dollars in cash in Mexico, were probably deserved.
Heading to the Marshall Islands
In the case of pool1, the fine was probably warranted. Unlike the Texan mining companies, Brunner clearly went out of his way to open a brokerage in the Marshall Islands – a country that, along with Vanuatu, has become the home for a set of retail brokerage hucksters and scammers.
For his crimes, Brunner will have to pay $990,000, including a $175,000 civil penalty, the disgorgement of $246,000 of gains and the repayment of $570,000 in bitcoin.
“Intermediaries should take notice that they will be held accountable by the CFTC for failing to comply with registration requirements and failing to implement policies and procedures that are crucial in protecting U.S. customers and our markets,” said CFTC Director of Enforcement James McDonald. “Through the Division’s Bank Secrecy Task Force, Enforcement will continue to investigate and prosecute such violations.”