Following a severe crackdown by the SEC, Boston-based crypto exchange Poloniex is reported to have settled the case by paying the regulator over $10 million in settlement charges.
According to a press release issued by the United States Securities and Exchange Commission on August 9, Poloniex violated investor protection laws by failing to register with the federal regulator as a securities broker.’ For two consecutive years, from 2017 to 2019, the exchange allegedly operated illegally and offered investors the opportunity to trade digital assets deemed to be securities.
Additionally, the SEC’s indictment states that Poloniex employees desired the exchange to operate ‘aggressively’ by offering more digital assets to traders in order to significantly increase the broker’s market share in the space. However, all of these charges and the resulting settlement were reached with the exchange neither admitting nor denying the SEC’s allegations.
While August 9 marked another successful day for the SEC, the Boston-based cryptocurrency broker Poloniex was brought to its knees by federal authorities in the United States. The SEC charged Poloniex with violating Section 5 of the Investor Protection Act by failing to register as a securities broker.’ According to reports, the exchange engaged in illegal trading operations for two consecutive years, from July 2017 to November 2019, without being detected by law enforcement. However, the SEC has tracked it down and it is currently facing a severe clampdown.
Poloniex Slashes A Settlement Deal with the SEC
Poloniex Slashes A Settlement Deal with The SEC The exchange has agreed to pay a $10 million settlement fee in order to resolve the dispute and resume operations. According to the SEC,’$10 million is a reasonable fund for the benefit of Victims.’ Additionally, exchange employees may face investigatory charges. Employees allegedly expressed a desire for the exchange to dominate the space, operate ‘aggressively,’ and offer more new digital assets for trading to investors, all of which are classified as high-risk securities by the SEC. According to Kristina Littman, the Commission’s Enforcement Chief, Poloniex chose profit over compliance by listing digital asset securities on its unregistered exchange.
In February 2018, Circle, the USDC stable coin issuer, acquired Poloniex for $400 million. However, the venture was short-lived, and Poloniex severed ties with Circle in October 2019 to launch a new cryptocurrency exchange called ‘Polo Digital Assets.’
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