The Commodity Futures Trading Commission warned operators of decentralized finance protocols on Thursday, saying it had filed and settled charges against the Opyn, ZeroEx and Deridex platforms.
Deridex and Opyn were charged with failing to register as a swap execution facility or designated contract market, failing to register as a futures commission merchant, and failing to adopt a customer identification program as part of a Bank Secrecy Act compliance program. ZeroEx, Opyn and Deridex were also charged with illegally offering leveraged and margined retail commodity transactions in digital assets, the regulator said in a statement.
Opyn, ZeroEx, and Deridex were ordered to pay civil monetary penalties of $250,000, $200,000, and $100,000, respectively, and to cease and desist from violating the Commodity Exchange Act and CFTC regulations.
"Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts," CFTC Director of Enforcement Ian McGinley said. "They do not. 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."
Digital asset protocols
Opyn, a Delaware-registered company based in California, developed a blockchain-based digital asset protocol that offered trading of a digital asset derivative token called oSQTH, whose value was based on an index that tracked the price of ether squared relative to the USDC stablecoin, according to the CFTC.
"The order finds that oSQTH tokens are swaps and leveraged or margined retail commodity transactions and therefore can be offered to retail users only on a registered exchange in accordance with the CEA and CFTC regulations," the regulator said. "Opyn unlawfully operated a facility for the trading or processing of swaps without registering as a SEF."
"The CFTC recognizes each respondents’ substantial cooperation with the Division of Enforcement’s investigation of this matter in the form of a reduced civil monetary penalty," the regulator continued.
Deridex, a Delaware company based in North Carolina, developed a blockchain-based digital asset trading protocol that offered trading of "perpetual contracts" the CFTC said "were leveraged derivative positions that provided for the exchange of one or more payments based on the relative value of STABL2 and another virtual currency." ZeroEx, a Delaware company based in California, developed a blockchain-based digital asset protocol and front-end application called Matcha that offered users the ability to trade digital assets through use of various blockchains, according to the CFTC.
"0x, the developer of DEX aggregator Matcha, recently cooperated with the CFTC to resolve an inquiry regarding tokens constituting less than 0.1% of Matcha’s trading volume since inception," Matcha said on X. "As part of our efforts to drive sustained web3 adoption, our team appreciates the CFTC’s bringing these tokens to our attention."
"At 0x, strategic decisions are made with input from outside legal counsel. In this case, we are implementing additional processes after constructive dialogue with the regulatory agency," it added.
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