The U.S. Securities and Exchange Commission (SEC) has charged Poloniex with operating an unregistered cryptocurrency exchange. Poloniex has agreed to a cease-and-desist order and to pay $10.34 million.
SEC Hits Poloniex With Cease-and-Desist Order, Penalties
The SEC announced Monday that “Poloniex LLC has agreed to pay more than $10 million to settle charges for operating an unregistered online digital asset exchange.”
From July 2017 through November 2019, Poloniex “facilitated buying and selling of digital asset securities.” The SEC explained that the platform was available to U.S. investors but “Poloniex did not register as a national securities exchange” and was not exempt from registration. Its failure to do so was a violation of Section 5 of the Exchange Act.
“Poloniex attempted to circumvent the SEC’s regulatory regime,” said Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit. “Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange.”
Noting that “The order establishes a Fair Fund for the benefit of victims,” the SEC detailed:
Without admitting or denying the SEC’s findings, Poloniex agreed to the entry of a cease-and-desist order and agreed to pay disgorgement of $8,484,313, prejudgment interest of $403,995, and a civil penalty of $1.5 million for a total of $10,388,309.
Poloniex is a wholly-owned subsidiary of Pluto Holdings Inc., a Delaware corporation, which is a wholly-owned subsidiary of Circle Internet Financial Ltd. The SEC noted that in November 2019, Pluto sold the Poloniex trading platform to a third party.
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