Bitfinex Fined $75,000 Over Trading Violations

Bitfinex Bitcoin

Bitfinex is a bitcoin exchange entity that deals with Margin Trading, Bitcoin exchange and lending of cryptocurrencies. It is the leading bitcoin exchange in terms of volume and price (USD/BTC) as reported in Bitcoinity.org. The company, based in Hong Kong, has been ordered to pay $75,000 as Civil Monetary Fine by CFTC (US Commodity Futures Trading Commission).

The charge on Bitfinex as stated by CFTC is that between April 2013 and February 2016, Bitfinex allowed customers (individuals and companies), who weren’t registered as qualified legal entity or individual, to transact with other Bitfinex customers on a margined, finances and leveraged basis. During this period, Bitfinex actually didn’t deliver the bitcoins to its customers, instead had it stored in digital wallets that are controlled by the Company.

This means, Bitfinex allowed off-exchange commodities trading (retail) which is illegal. Only a registered Futures Commissions Merchant (FCM) is allowed to carry out these kinds of transactions, while Bitfinex didn’t register itself as a Futures Commissions Merchant (FCM)

There were rumors surrounding the business world that Bitfinex is under CFTC’s scanner. The news surfaced from an anonymous post in Social Media sites mentioning CFTC’s attorney Michael Frisch’s involvement in this case.

The Company was not available for comment about the investigation, however, they have mentioned about the investigation and subsequent settlement in their website. The Company mentioned about making notable changes to the rules of Financed Trading for US customers. The Company also emphasized that they would continue to enhance customers’ experience and satisfaction, while strictly adhering to laws and regulations.

The Company also mentioned that the CFTC were open to constructive and open discussion with them which resulted in a better clarity of the laws and regulations pertaining to Financed Trading. The CFTC found that the company violated sections 4(a) and 4(b) of the U.S. Commodity and Exchange Act. Bitfinex’s response to this charge was neutral, i.e. they neither disputed nor agreed to the charge. They agreed to pay $75,000 as Civil Monetary Penalty and also comply diligently with all laws and regulations.

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