The Commodity Futures Trading Commission (CFTC) announced that a federal court entered an order resolving a CFTC action against 1pool Ltd., located in the Marshall Islands, and its chief executive officer and owner, Patrick Brunner, for illegally offering retail commodity transactions that were margined in bitcoin, failing to register as a futures commission merchant (FCM), and failing to meet its supervisory duties by not having the required anti-money laundering procedures in place.
The defendants engaged in unlawful retail commodity transactions in the form of contracts for difference margined in bitcoin with US customers who were not eligible contract participants, acted as an FCM for such US customers by accepting bitcoin as margin for trading without being registered with the CFTC, and failed to implement an adequate know-your-customer and customer identification program.
A civil monetary penalty of $175,000 was imposed, as well as disgorgement of $246,000 of gains. The defendants are required to pay to all known US customers the bitcoin held by defendants in US customers’ accounts and includes the defendants’ certification that they have repaid to US customers approximately 93 bitcoins, valued at approximately $570,000. In total, the defendants are paying a total of $990,000 in resolution of the CFTC action.
James McDonald, CFTC director of Enforcement, said in a statement: “Intermediaries should take notice that they will be held accountable by the CFTC for failing to comply with registration requirements and failing to implement policies and procedures that are crucial in protecting US customers and our markets. Through the Division’s Bank Secrecy Task Force, Enforcement will continue to investigate and prosecute such violations.”
The CFTC’s Bank Secrecy Act Task Force is a coordinated effort across the Division of Enforcement to identify and charge those who fail to carry out their Bank Secrecy Act (BSA) and anti-money laundering (AML)-related supervisory responsibilities in connection with markets regulated by the CFTC.
In coordination with other criminal and regulatory authorities as appropriate, the task force focuses on identifying, investigating, and charging instances in which FCMs and IBs fail to comply with their BSA responsibilities by failing to detect and report suspicious conduct, or by failing to develop or implement KYC/CIP procedures and doing business with those engaged in illicit activity.