U.S. regulators filed charges against XBT Corp. Thursday, alleging the company failed to register as a futures commission merchant (FCM).
According to the charges, XBT solicited or accepted futures orders from 24 U.S. customers between March 2016 and July 2017, accepting bitcoin for margin trades. The company did not register as an FCM during this time.
XBT had overall at least 90 investors, who conducted more than 18,000 security-based swaps between 2014 and 2019, conducting more than $100 million in transactions "based on U.S.-listed securities," according to a legal filing. Of that, $43.8 million in trades were made by U.S. residents.
The company will pay more than $130,000 in fees and disgorgement as part of the settlement, with the SEC taking custody of the funds over the next year. The CFTC’s press release states that the agency "recognizes that FGC’s civil monetary penalty in this matter was substantially reduced in light of FGC’s cooperation and remediation."
XBT rolled First Credit out in October 2014, offering "contract for difference" (CFD) derivatives products allowing customers to deposit bitcoin in turn for purchasing credits representing shares in companies such as Apple.
The U.S. FBI and Swiss Financial Market Supervisory Authority (FINMA) participated in the investigation, according to the releases.
XBT did not immediately respond to a request for comment.
SEC image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.