SEC fines Poloniex crypto exchange $10 million

SEC fines Poloniex $10 million for unregistered digital asset securities trading.

The U.S. Securities and Exchange Commission (SEC) fined the cryptocurrency exchange Poloniex $10 million for organizing trading of unregistered securities in the form of digital assets.

According to the regulator’s order, from July 2017 through November 2019 Poloniex, through its trading platform, provided American investors with access to buying and selling digital assets that were investment contracts and thus securities.

According to the SEC, around August 2017 the Poloniex team decided to be more aggressive in promoting such assets to expand market share. In July 2018 the company concluded that continuing to trade tokens that could be classified as securities carried “moderate risk” in light of growing revenues from it.

“Poloniex chose to prioritise profit while complying with federal securities laws by enabling support for digital assets that are recognised as securities on its unregistered exchange. The company attempted to circumvent the Commission’s regulatory regime that applies to any marketplace bringing together buyers and sellers of securities, regardless of the technology used,” said Christina Littman, head of the SEC’s Division of Enforcement.

Poloniex neither admitted nor denied the regulator’s findings and agreed to pay:

• illegally obtained proceeds of $8,484,313, as well as $403,995 in interest;
• a fine of $1.5 million.

Total: $10,388,309.

In January 2018 the exchange was acquired by the bitcoin startup Circle, reportedly for $400 million. Media reports said the change of ownership then spared Poloniex from SEC enforcement.

However, in November 2019 the platform was bought by a group of investors including Justin Sun, founder of the blockchain project TRON.

Earlier in May 2021, the Ontario Securities Commission filed a lawsuit against Poloniex. The regulator accused the platform of unregistered trading of shares and derivatives.

Subscribe to ForkLog news on VK.