Two top U.S. financial watchdogs, the United States Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) have filed a cease-and-desist order against XBT Corp. SARL, a.k.a First Global Credit, a Swiss Bitcoin-based securities dealer that allegedly solicited investments from U.S. investors without registering with the agencies. The firm has also been ordered to pay over $200k as fine, according to an October 31, 2019 press release.
End of the Road
As part of its ongoing efforts to sanitize the U.S financial ecosystem, the Securities and Exchange Commission (SEC) has taken action against First Global Credit, a Swiss securities dealer, for offering bitcoin-linked investment products to U.S. residents without following due process.
According to an SEC statement, First Global Credit employed various marketing strategies to target and convince U.S. residents to invest in a vast array of its investment products with bitcoin (BTC).
The SEC also alleges that the firm used various terminologies to describe its investment products, including “Bitcoin Asset Linked Notes.” However, the products allowed investors to take advantage of the price movement of securities without owning them, including the securities listed on U.S. securities exchanges.
The SEC further alleged that despite the name the firm gave to its products, the investment instruments offered by First Global Credit are categorized as security-based swaps under the U.S federal securities laws.
As such, the firm’s failure to register these security-based swaps in accordance with the Dodd-Frank Act, or transact them on a registered national exchange, is a punishable offense.
Though First Global Credit did not admit or deny the SEC’s allegations, it has however agreed to the agency’s cease-and-desist order, and disgorgement of $31,687 and a penalty of $100,000.
David Peavler, Regional Director of the SEC’s Fort Worth Regional Office, said:
“Federal securities laws impose certain requirements for offering and selling security-based swaps to retail investors in the U.S. These obligations cannot be avoided merely by describing the swap transactions by a different name or funding it with cryptocurrencies.“
In the same vein, the CFTC has also filed a cease-and-desist order against First Global Credit, plus a monetary penalty of $100,000.