FalconX hit with $1.7 million fine for regulatory violations

• The Commodity Futures Trading Commission (CFTC) has fined crypto trading firm FalconX a total of $1.7 million.
• The CFTC said the fine relates to the Seychelles-based brokerage platform’s failure to register as a futures commission merchant (FCM).

one in Press releaseThe Commodity Futures Trading Commission (CFTC) says the filing and settlement of charges against Falcon Labs is the first such action against an unregistered. crypto derivatives Exchange Provider.

In its filing, the CFTC alleged that FalconX illegally offered its crypto derivatives products to US clients between October 2021 and March 2023.

Acting as an intermediary, the platform created accounts and sub-accounts for customers in the US, bypassing KYC requirements. This is only after the CFTC filed a complaint about this Binance and former CEO Changpeng Zhao against that Falcon Labs has improved its customer-identification processes.

CFTC fines FalconX, issues cease-and-desist order

Following this development, a cease-and-desist order has gone into effect against Falcon Labs, which prohibits it from offering unregistered crypto derivatives products to US persons.

In terms of penalties arising from the violations, FalconX will pay $1,179,008 in disgorgement and $589,504 in civil monetary penalties. FalconX reportedly collected $1,179,008 in net fees.

According to the CFTC, the regulator imposed a lower civil monetary penalty against the crypto company due to “substantial cooperation” with the watchdog’s enforcement division.

,Today’s action highlights that the CFTC will not hesitate to charge fees to any entities—exchanges or intermediaries—that are providing customers access to digital asset products and services that require registration but are appropriately failed to registersaid Ian McGinley, director of the CFTC’s enforcement division.

Along with active efforts to improve customer identification, Falcon cooperated with the Commission – a factor in the CFTC’s decision to seek a lower civil monetary penalty.

In December 2023, the U.S. District Court for the Northern District of Illinois Approved the settlement that Binance and Zhao agreed to with the CFTC,

As reported, the former Binance chief was ordered to pay $150 million and the exchange $2.7 billion.

Binance agreed to a historic $4.3 billion settlement with US regulators in November.