On March 11, the Commodity Futures Trading Commission (CFTC) published that a federal court entered a Consent Order (Order) aiming to resolve a CFTC action against 1pool Ltd. The company is situated in the Marshall Islands. The resolution action was taken against 1Pool together with its CEO and owner, Patrick Brunner, for offering retail commodity transactions illegally.
The involved transactions were margined in bitcoin but the company did not register as a futures commission merchant (FCM). Also, the company failed to meet its supervisory duties by not having the necessary anti-money laundering procedures fully operational. A civil monetary penalty of $175,000 is imposed by the Order with an additional charge of $246,000 of gains.
The Order also directs the defendants to pay to all known US customers the BTC that they hold in customers’ accounts. The fine further includes the defendants’ certification repaid to U.S. customers amounting to about 93 bitcoins, valued at approximately $570,000. Cumulatively, the defendants are paying up to $990,000 in the resolution of the CFTC action.
CFTC Director of Enforcement, James McDonald, said that all intermediaries will be held accountable by the commission whenever they fail to comply with the registration needs. Also, they will be prosecuted for failure to implement procedures and policies that are essential in protecting the US customers and the general markets.
The Division’s Bank Secrecy Task Force will investigate and also prosecute any violations of this kind. The 1Pool court Order originated from a CFTC complaint filed on September 27, 2018. The Order reveals that the defendants engaged in illegal retail commodity transactions contracts for difference margined in bitcoin.
Furthermore, they engaged US customers who were not in any way eligible contract participants. 1Pool acted as an FCM for these ineligible U.S. customers by accepting BTC as margin for trading without being registered with the CFTC. The company also did not implement an adequate KYC and customer identification program.
This Order permanently discourages the defendants from further violations of the Commodity Exchange Act and the commission’s regulations as currently charged.