In its latest crackdown, the U.S. Commodities and Futures Trading Commission (CFTC) has recently taken enforcement actions against three decentralized finance (DeFi) firms over the alleged illegal trading of digital asset derivatives.
On Thursday, September 7, the CFTC named three DeFi firms – Opyn Inc., ZeroEx Inc. and Deridex Inc. – for breaking agency rules and allowing US customers to illegally trade digital asset derivatives without registering on the platform. As a result, the CFTC has issued a cease and desist order to these firms while slapping civil penalties of $250,000, $200,000, and $100,000, respectively.
The latest development comes as the US CFTC initiated a string of actions on Thursday, aimed at addressing the evolving crypto space. Firstly, the regulator proposed a time-based crypto pilot program. Additionally, it also settled the largest Bitcoin forex fraud in the history of the market.
The U.S. government is intensifying its scrutiny of decentralized finance, commonly referred to as DeFi in the industry. These platforms enable users to engage in digital asset trading, borrowing, and lending without requiring intermediaries.
In recent months, government agencies have also issued regulations, imposed sanctions, and taken enforcement actions to signal increased oversight and scrutiny of DeFi participants. Commenting on the latest development, CFTC enforcement director Ian McGinley said:
“Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts. They do not.”
CFTC Winning Over DeFi Frauds
Recently, the US CFTC registered a win against a decentralized autonomous organization called Ooki DAO. The DAO was allegedly operating an illegal trading platform and also violated other agency rules. In June, a federal judge ordered to shutdown and pay a penalty of over $600,000.
However, not all members of the CFTC agreed to the agency’s decision on Thursday. Republican Commissioner Summer Mersinger said that the CFTC should first focus on offering clear rules for Defi instead of enforcement. She also added: “I am concerned that the commission in these cases is taking another step down the path of bringing enforcement actions when we should be engaging with the public”.
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