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- Kraken fined for offering illegal trading services.
- As a result, the U.S. ordered Kraken to pay $1.25m.
- Since June 2021, Kraken has limited its margin on crypto assets.
Kraken — one of the world’s leading crypto exchanges has been penalized by the United States Commodity Future Trading Commission (CFTC). The crypto exchange company will pay a sum of $1.25 million in settlement fee to CFTC. This follows Kraken’s alleged illegal trading services.
The CFTC asserted that the Kraken did not register to legally trade. Citing from the report, Kraken did not work in line with the Commodities Exchange Act for offering margin crypto products from June 2020. The exchange provided margin ratios of up to 5:1.
According to the official press release, Kraken failed to register as either a Future Commodity Merchant (FCM) or a Designated Contract Market (DCM) before it started to offer the margined crypto transaction services. Kraken solely kept custody of the margined assets during the one period.
Commenting on the matter, CFTC acting director, Vincent McGonagle even said that the Kraken’s fine is part of their effort to foster the safety of the US customers. Going forward, the firm would have to suspend its margin services to U.S citizens.
However, it remains uncertain how the exchange will operate under FCM rule since the current rules do not fit the crypto firm’s role as an exchange.
In regard to the fine, the sanction looks somewhat less compared to Kraken’s $10 billion worth. Going back, crypto derivatives exchange, BitMEX received a $100 million penalty in August 2021 by the CFTC and the Financial Crimes Enforcement Network.