The United States Commodity Futures Trading Commission (CFTC) has taken regulatory action against three decentralized finance (DeFi) protocols, alleging that they failed to register various derivatives trading offerings.
The regulator announced on September 8 that it issued orders against Opyn, ZeroEx, and Deridex for failing to register as a swap execution facility or designated contract market and failing to register as a futures commission merchant. Additionally, the CFTC stated that the two protocols did not comply with customer provisions outlined in the Bank Secrecy Act.
All three companies were also charged with illegally offering leveraged and margined retail commodity transactions in digital assets.
The orders from the CFTC require Opyn, ZeroEx, and Deridex to pay penalties of $250,000, $200,000, and $100,000, respectively, and to cease and desist from violating the Commodity Exchange Act and the CFTC’s regulations. The companies have agreed to settle the charges.
Ian McGinley, CFTC’s director of enforcement, stated that DeFi platforms must take better initiative to operate within the legal boundaries:
“Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts […] they do not,” McGinley said. He added: “The DeFi space may be novel, complex, and evolving, but the Division of Enforcement will continue to evolve with it and aggressively pursue those who operate unregistered platforms that allow U.S. persons to trade digital asset derivatives.”
However, not everyone agreed with the CFTC’s actions. Ryan Sean Adams, co-host of Bankless, described the CFTC’s enforcement action as another attack on DeFi.
Opyn is a DeFi investment strategy platform with $23 million in total volume locked (TVL) on its protocol, while ZeroEx is a decentralized exchange based on Ethereum.
Deridex was a derivatives platform powered by Algorand, but the project suddenly shut down in February, causing its TVL to drop from about $150,000 to $133 as of September 8, according to DefiLlama.
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