CFTC enforcement director calls DeFi exchanges 'obvious threat'

The Commodity Futures Trading Commission’s enforcement director called unregulated decentralized finance exchanges an "obvious threat" in recent remarks following the agency's charges against a trio of DeFi protocols last week. 

"The existence of unregulated DeFi exchanges is an obvious threat to the markets regulated and customers protected by the CFTC, and it is one we have taken very seriously," the CFTC’s Enforcement Director Ian McGinley said earlier this week in a speech at a conference hosted by the Practising Law Institute. 

The CFTC charged three DeFi protocols last week — Opyn, ZeroEx and Deridex — for offering "illegal digital asset derivatives trading." The three settled the charges and were ordered to pay civil monetary penalties of $250,000, $200,000, and $100,000, respectively.

Those platforms engaged in multiple activities that required registration from the CFTC, McGinley said. 

Throughout the speech, McGinley cited other DeFi-related cases the CFTC brought over the past few years, including ones against Polymarket and Ooki DAO. Polymarket settled with the CFTC for $1.4 million, and the agency won its case against Ooki DAO in June. 

"All of this is to say, the CFTC has brought groundbreaking actions in the DeFi space standing for the proposition that when offering core derivative products based on digital assets to the public—whether in a centralized or decentralized manner—you must comply with the law," McGinley added. 

Proposal to take the CFTC to court

Following the CFTC's charges against Opyn, ZeroEx and Deridex last week, Coinbase CEO Brian Armstrong argued that the three should take the regulator to court.  

"My hope is these DeFi protocols take these cases to court to establish precedent," Coinbase's Armstrong wrote on Wednesday on X. "The courts have proven to be very willing to uphold rule of law. The only thing this is accomplishing is to push an important industry offshore."