1pool Ltd., an international securities dealer, is facing fines of almost a million dollars after being discovered by an FBI agent to be running an illegal Bitcoin operation, the CTFC announced On March 11, 2019.
Say what you will about the crypto industry, it certainly keeps law enforcement on their toes, particularly the Commodity Futures Trading Commission (CTFC).
Just a few months after they were forced to open an investigation into VIX for trading manipulation and released examination priorities for cryptocurrency control, they have been called into action again and lay down sanctions against a securities trading firm.
According to a March 11, 2019 announcement, they will be leveling a $990,000 fine against international securities dealer 1pool Ltd. and its CEO Patrick Brunner. They are being fined for carrying out illegal Bitcoin-related activities with American clients.
Caught in the Act
Up until the CTFC got involved, 1pool Ltd. was a Marshals island-based firm which dealt in BTC-funded security-based swaps.
Their crime, in this case, had been offering illegal BTC-margined retail commodity transactions to customers in the U.S. They did not register as a futures commission merchant and failed to comply with Anti-Money Laundering (AML) protocols.
They were discovered when an undercover FBI agent purchased security-based swaps while not adhering to U.S. security laws of providing adequate identification. According to the investigation, users were allowed to sign up and conduct transactions while providing only their username and email address, which is a direct violation of American securities laws that require proper identification of all individuals taking part in security trading.
The investigation was carried out as a joint effort between the CTFC, the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI).
Paying the Fine
As punishment for their offenses, 1pool Ltd. has been ordered a civil penalty of $175,000. They are also to reimburse their gains to the sum of $246,000, and return 93 BTC (valued at $570,00 by the CTFC) to their US customers.
This case was used to serve as a warning to other intermediaries about law enforcement watching them and their activities.
“Intermediaries should take notice that they will be held accountable by the CFTC for failing to comply with registration requirements and failing to implement policies and procedures that are crucial in protecting U.S. customers and our markets,” said James McDonald, CFTC Director of Enforcement.