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Bitcoin Exchange Kraken to Pay $1.25M to Settle CFTC Charges

The Commodities Futures Trading Commission said Kraken had let customers illegally trade margin products tied to crypto.
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Cryptocurrency exchange Kraken agreed to pay $1.25 million to settle CFTC charges that it let customers illegally trade margin products linked to bitcoin and other cryptocurrencies.

The Commodity Futures Trading Commission also accused the San Francisco company of failing to register as a futures commission merchant. 

Kraken, founded in 2011, is one of the largest digital asset exchanges in the U.S.

“This action is part of the CFTC’s broader effort to protect U.S. customers,” Acting Director of Enforcement Vincent McGonagle said in a statement. 

The CFTC said that from June 2020 to July 2021, "Kraken offered margined retail commodity transactions in digital assets to U.S. customers who were not eligible contract participants."

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And margined, leveraged and financed digital asset trading "offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations,” the agency said.

“We appreciate that today’s settlement acknowledges our cooperation and engagement on the issue,” Kraken said in a statement.

“We are committed to working with regulators to try to ensure the rules governing digital assets create a level playing field globally – one that allows the crypto space in the U.S. to flourish, while protecting the interests of individuals and the integrity of the industry.”

Bitcoin recently has been on a rollercoaster ride, continuing the volatility that has distinguished the digital currency from its beginning 13 years ago.

It recently traded at $42,244, up 2%. It has slid 20% since Sept. 5, but surged 44% year to date.

Bitcoin bulls say the digital asset is a hedge against inflation and a store of value. Bears note that the only thing bitcoin has proved to be so far is a vehicle for speculation.