The US financial authority Commodity Futures Trading Commission (CFTC) has accused 14 crypto companies of failing to register with the authority or for making misleading claims.
12 of the companies have failed to register as futures commission merchants (FCMs) despite offering users to purchase binary options based on the value of foreign currencies and cryptocurrencies including Bitcoin.
Binary options are transactions that predict whether a rate, such as an exchange rate, will be above or below a certain level at some point in the future. Users can make profits by guessing the correct prediction.
The other two companies were charged against making false claims of CFTC Registration or NFA Membership.
CFTC is the US financial agency that regulates the commodity futures market. Platforms that offer commodity futures contracts to US users are required to register with the CFTC.
None of the 14 platforms covered in the proceedings are well known, and many have low confidence scores on fraud check sites.
In an official press release, Division of Enforcement Acting Director Vincent McGonagle remarked:
“Today’s actions reflect the CFTC’s dedicated efforts to aggressively root out bad actors falsely claiming to hold legitimate registrations and protect the trading public.”
While the CFTC has targeted low-profile platforms this time around, it has directed scrutiny against major exchanges for investigations and accusations as well.
For instance, in March, the CFTC reportedly was investigating Binance for offering derivative sales to US residents. However, any violations regarding the matter have not been revealed yet.
In addition, BitMEX, a cryptocurrency derivatives exchange, was also charged with offering unlicensed products to US customers. It recently settled with regulators and agreed to pay a fine of $ 100 million.