U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have brought charges against the broker 1pool Ltd, also known as 1Broker, registered in the Marshall Islands.
The SEC's charges were raised because of the company's violation of federal laws and the implementation of schemes for selling bitcoin swaps with the characteristics of securities. According to the regulator, the trade was conducted without observing controlled investment limits. The CFTC also blamed 1Broker and its CEO Patrick Brunner, pointing out similar violations of federal laws and failure to comply with anti-money laundering requirements.
Clients of 1pool Ltd turned out to be the U.S. citizens and international investors. SEC, in this case, protects the interests of American investors. After all, international companies that carry out transactions with American investors in the cryptocurrencies, still have to comply with federal securities laws.
“The SEC alleges that a Special Agent with the Federal Bureau of Investigation, acting in an undercover capacity, successfully purchased several security-based swaps on 1Broker’s platform from the U.S. despite not meeting the discretionary investment thresholds required by the federal securities laws,” commented SEC specialists.
FBI also initiated the confiscation of the 1broker.com domain on the basis of violation of a number of laws, including the company's performance without registration.
It is worth noting that U.S. watchdogs regularly clean the crypto market from dishonest participants. Earlier, Crypto Asset Management (CAM), which in its marketing materials claimed to be the first regulated U.S. cryptocurrency fund, was suspended. The project collected more than $3.6 million in four months at the end of 2017, falsely claiming that the fund is regulated by SEC and filed a registration application with the agency. The regulator stressed that by implementing unregistered public offering and investing more than 40% of assets in digital securities, the fund acted as an unregistered investment company. After contacting SEC staff, the project discontinued its public offer and offered investors a buyback.
SEC also intends to punish the organizers of PlexCoin ICO for misleading investors. The regulator appealed to the District Court of New York with a petition to impose sanctions on the organizers of the fraudulent crypto scheme PlexCoin Dominique Lacroix and Sabrina Paradise-Royer. The office claims that they ignored previous court orders relating to accounting and asset recovery. SEC wants to force the defendants to cooperate or force them to comply with previous orders.
Last December, SEC filed a lawsuit on fraud with securities against Lacroix, Paradise-Royer and their firm PlexCorp, while freezing their assets with an urgent order. It is assumed that PlexCorp raised $15 million, of which $810,000, according to the SEC, were paid through the processing service Stripe. SEC suspects that most of the funds remained on the crypto wallets controlled by Lacroix.
CFTC is also closely involved in the regulation of the crypto sphere. Recall, in February, the agency announced the creation of a working group specifically for this task. Representatives of the Commission urged the crypto community to join forces to regulate the digital currency industry. Representatives of the agency are sure that while the government develops optimal methods of control, it is necessary to create standards for self-regulation. In addition, the CFTC presented methodological recommendations for crypto exchanges, which are preparing to launch crypto derivatives.
Representatives of both financial regulators, the SEC and the CFTC, have already discussed close interaction on crypto regulation issues. Brian Quintenz, CFTC Commissioner, believes that the agency needs to interact with the SEC to "ensure that differences in product nomenclature do not enable bad actors to slip through jurisdictional cracks."
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