- 1pool Ltd and its CEO, Patrick Brunner have been ordered to pay $990K by the CFTC
- Owners of the firm failed to obtain the necessary futures commission merchant (FCM) license
- The CFTC also alleges that 1pool did not carry out any form of KYC and AML checks on investors
The United States Commodity Futures Trading Commission (CFTC) has handed down a $990K fine to 1pool Ltd. and its founders for offering illegal Bitcoin-linked investments to U.S residents without registering as a futures commission merchant (FCM), according to a press release this week.
End of the Road for 1Pool and its founders
The Commodity Futures Trading Commission (CFTC) has announced that a federal court has entered a Consent Order, mandating 1pool Ltd., a Marshall Islands-based cryptocurrency investment firm and its CEO, Patrick Brunner, to pay a fine of nearly $1 million for offering bitcoin-linked investments to U.S. residents without registering as a futures commission merchant (FCM) as required by the law.
The financial watchdog also claims that 1pool and its founders did not do their supervisory duties, as they failed to put any form of know-your-customer (KYC) and anti-money-laundering (AML) measures in place.
Full refund for investors
Accordingly, the court order imposes a civil monetary penalty of $175,000 and the forfeiture of $246,000 of gains. Also, the order requires the defendant to refund all U.S. participants their 93 bitcoins valued at about $570K.
In essence, the defendants must pay a total of $990,000 to resolve the CFTC case.
Commenting on the matter, CFTC Director of Enforcement, James McDonald made it clear that all market participants who do business in the US without securing the relevant licenses will be held accountable to comply with laws of the land:
“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. Through the Division’s Bank Secrecy Task Force, Enforcement will continue to investigate and prosecute such violations.”
As previously reported by Blockchain Reporter, the U.S. Securities and Exchange Commission (SEC) filed charges against 1pool and its founders for irregularities in their operations.
While the SEC has been actively hunting down organizers of illegal initial coin offerings (ICOs) and other crypto-related businesses in the U.S, this latest case goes a long way to show the CFTC is now ready to crush down illicit crypto-fueled startups.
In December 2018, the CFTC published a Request for Information (RFI) aimed at gathering information from the public about the crypto markets, to enable it formulate the most suitable regulatory framework for it.