In what is the latest sanction against a cryptocurrency exchange in the United States, one of the country’s biggest exchanges, Kraken, has been slapped with a fine of $1.25 million by the Commodity Futures Trading Commission (CFTC) for violating the country’s Commodity Exchange Act (CEA). 

According to a statement issued by the commission, the San Francisco-based company was not a licensed future commission merchant and had illegally offered margin trading options to its US users.

The commission noted that the crypto exchange “served as the sole margin provider and maintained physical and/or constructive custody of all assets purchased using margin for the duration of a customer’s open margined position.”

While Kraken has now updated its margin trading policy earlier this year, the CFTC revealed that the exchange had perpetrated the act between June 2020 to July 2021. During this period, the crypto firm “supplied the digital asset or national currency to pay the seller for the asset.”

Kraken required customers to exit their positions and repay the assets received to trade on margin within 28 days. Customers could not transfer assets away from Kraken until satisfying their repayment obligation. If repayment was not made within 28 days, Kraken could unilaterally force the margin position to be liquidated. Kraken could also initiate a forced liquidation if the value of the collateral dipped below a certain threshold percentage.

Due to these infractions, the CFTC has now mandated Kraken to pay a fine of $1.25 million and that the exchange must “cease and desist” from further violations of the CEA.

Speaking on this development, Vincent McGonagle, who is the commission’s acting director of enforcement said the fines and investigation of the commission were part of the effort of the regulator to protect US customers.

He continued that “margined, leveraged or 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 post Kraken fined $1.25 million by CFTC for offering Bitcoin, crypto futures appeared first on CryptoSlate.

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