Announcing a Return to our Roots: The All-New Bitcoin Magazine
Verified on Po.et Created with Sketch. Verified on Po.et

SEC Charges Forex Broker for Illegal Securities Swaps Involving Bitcoin

by

        SEC Charges Forex Broker for Illegal Securities Swaps Involving Bitcoin
SEC Charges Forex Broker for Illegal Securities Swaps Involving Bitcoin

In what seems like the first coordinated strike from government agencies, the U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Federal Bureau of Investigation (FBI) have taken action against a securities broker for violating federal laws in connection with security-based swaps funded by bitcoin.

On September 27, 2018, the SEC announced that it had filed charges at a U.S. District Court for the District of Columbia against Marshall Islands-based securities company 1pool Ltd., also known as 1Broker, and its Austria-based CEO Patrick Brunner for trading security swaps to American investors and others across the world without meeting the "discretionary investment thresholds required" by federal securities law.

The SEC further claims that 1Broker was fraudulently issuing swaps as it was not a registered "securities-based swaps dealer," and it also failed to transact on a registered national exchange.

Commenting on the claims, Shamoil Shipchandler, director of the SEC's Fort Worth regional office, said the SEC would protect U.S. investors on any platform regardless of the currency used in the transaction.

"International companies that transact with U.S. investors cannot circumvent compliance with the federal securities laws by using cryptocurrency."

The SEC is seeking permanent injunctions, penalties and "disgorgement plus interest" against 1Broker and its CEO.

Responding to the SEC's allegation, 1Broker assured customers of the safety of their funds and said they were ready to cooperate with the SEC.

The CFTC filed a similar complaint against 1Broker for illegally offering off-exchange, transactions, not registering as a Futures Commission Merchants (FCM), and failure to implement anti-money laundering and supervisory features.

The statement from the CFTC reads in part:

"Entities required to be registered as FCMs such as 1pool, are required by Commission Regulations to diligently supervise all activities of their officers, employees, and agents relating to their business as an FCM, including the handling of customer accounts, and to implement and maintain adequate supervisory systems and procedures."

The Federal Bureau of Investigation followed this up with a seizure of the 1Broker.com domain name. The Bureau claims the domain was taken down after a U.S. District Court for the District of Columbia found probable cause that it's in violation of federal laws.


Recommended

QuadrigaCX Sent Deposits Allegedly Linked to CEO’s Widow, Mailed Withdrawals in Cash

Emails suggest that some clients of QuadrigaCX may have received deposits from entities associated with Jennifer Robertson, despite sworn claims that she had nothing to do with the exchange's operations prior to her husband's death.

Colin Harper

First QuadrigaCX Monitor Report: $460k in BTC “Inadvertently” Sent to Cold Wallet

The court document states, “On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 to Quadriga cold wallets which the Company is currently unable to access.”

Colin Harper

Hacker Gets 10 Years in First SIM-Swapping Sentencing in the U.S.

SIM swappers are known to target high-security online domains such as social media accounts, email addresses, bank accounts and cryptocurrency wallets.

Jimmy Aki

Court Grants QuadrigaCX Bankruptcy Protection

On January 31, 2019, the cryptocurrency exchange went offline posting a statement that they had filed for creditor protection.

Jessie Willms