The exchange of crypto assets Poloniex has agreed to enter into an agreement with the US Securities and Exchange Commission (SEC) for more than $ 10 million, according to a press release released yesterday. The platform was accused of operating an unregistered online digital asset exchange.
Poloniex offers spot trading of cryptocurrencies, as well as margins, futures and loans. The exchange was acquired by the issuer of stablecoins Circle in February 2018 for $ 400 million. Then, in October 2019, Poloniex announced that it was parting ways with Circle to create Polo Digital Assets and would no longer support U.S. customers.
From July 2017 to November 2019, however, the SEC claims that the Poloniex platform met the definition of an” exchange ” under securities laws because it provided an order book, a trading engine and a website to facilitate trading.
The SEC found that Poloniex violated section 5 of the Exchange Act by not registering as a national exchange or requesting an exemption, although the platform is available in the United States and facilitates the purchase and sale of securities in the form of digital asset investment contracts.
According to the statement, Poloniex wanted to increase its market share by making potential securities available for trading in the summer of 2017, according to internal employee statements. The following year, the exchange continued to offer digital assets that it considered “medium risk” to be securities.
The head of the cyber unit of the SEC’s enforcement division, Kristina Littman, commented : ” Poloniex chose to increase profits over compliance with federal securities laws by including digital assets on its unregistered exchange. Poloniex attempted to circumvent the SEC’s regulatory regime, which applies to any marketplace that matches buyers and sellers of securities, regardless of the technology applied. »
Poloniex has accepted a cease and desist order, without admitting or denying the SEC’s findings, and will have to pay a total of $10,388,309. This includes a civil fine of $ 1.5 million, restitution of $ 8,484,313 and preliminary ruling interest of $ 403,995. The money will be used to create a fund for victims.