The Commodity Futures Trading Commission(CFTC) has issued an order filing and settling charges against bZeroX, blockchain software protocol and its founders.
Founders Tom Bean and Kyle Kistner are asked to pay a civil penalty fine of $250,000 for offering illegal, off-exchange trading of digital assets, registration violations and neglecting to adopt a customer ID program required as part of the Bank Secrecy Act compliance program from June 2019 to August 2021.
Acting Director of Enforcement Gretchen Lowe said, “These actions are part of the CFTC’s broader efforts to protect U.S. customers in a rapidly evolving decentralized finance environment.”
The successor of bZeroX, Ooki DAO has also been charged by the CFTC for violating the same laws as bZeroX.
The CFTC is seeking restitution, disgorgement, civil monetary penalties, trading and registration bans, and injunctions against further violations of the CEA and CFTC regulations.
Lowe further said, “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.”
“These requirements apply equally to entities with more traditional business structures as well as to DAOs.”
Commissioner Summer K. Mersinger released a statement expressing her dissent with the CFTC’s decision.
She said, “We cannot arbitrarily decide who is accountable for those violations based on an unsupported legal theory amounting to regulation by enforcement while federal and state policy is developing.”
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