CFTC brings significant enforcement action against online Cryptocurrency Exchange

The action reflects the CFTC’s expanded jurisdiction and provides further clarity on what constitutes “actual delivery” in cryptocurrency trading.

On June 2, 2016, the US Commodity Futures Trading Commission (CFTC) issued an order (the Bitfinex Order) filing, and simultaneously settling, charges against Hong Kong-based BFXNA, Inc., d/b/a Bitfinex (Bitfinex), in connection with Bitfinex’s operation of an online cryptocurrency trading platform (the Platform).

Specifically, the Bitfinex Order finds that Bitfinex facilitated the execution of illegal, off-exchange commodity transactions in violation of the Commodity Exchange Act (the CEA) by (i) permitting retail and non-retail users to engage in financed cryptocurrency transactions on the Platform that did not result in “actual delivery” of the underlying cryptocurrency within 28 days and (ii) failing to register the Platform with the CFTC as a designated contract market (DCM).

The Bitfinex Order further finds that Bitfinex violated the CEA by accepting cryptocurrency orders and receiving customer funds in connection with such transactions on the Platform, without registering with the CFTC as a futures commission merchant (FCM).


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