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- The CFTC has charged three companies with illegally offering leveraged and margin commodity trades involving digital assets.
- Critics have raised concerns about the CFTC’s enforcement actions.
The U.S. Commodity Futures Trading Commission [CFTC] has taken significant regulatory action against three decentralized financial institutions [DeFi] protocols for their alleged inability to register various derivatives trading offers.
In a rack on September 8, the CFTC announced that it had issued orders against Opyn, ZeroEx and Deridex.
More specifically, Deridex and Opyn were charged for failing to register as a swap execution facility or designated contract market, and for failing to register as a futures commission trader.
In addition, the CFTC found that both protocols did not comply with the customer provisions set forth in the Bank Secrecy Act.
The CFTC imposes significant fines and prohibitions
All three companies were also charged with illegally offering leveraged and margin commodity transactions involving digital assets. As a result of these actions, the CFTC’s orders required Opyn, ZeroEx, and Deridex to pay fines of $250,000, $200,000, and $100,000, respectively.
In addition, the CFTC ordered them to stop violating the Commodity Exchange Act and the CFTC’s regulations. The companies have agreed to settle the charges against them.
Ian McGinley, the CFTC’s Director of Enforcement, emphasized the importance of DeFi platforms adhering to legal boundaries, stating:
“DeFi operators have been led to believe that illegitimate transactions become legal when facilitated by smart contracts… they don’t.”
He also added that the Enforcement Division will continue to evolve and aggressively prosecute those operating unregistered platforms.
However, not everyone is happy with the CFTC’s actions. Ryan Sean Adams, co-host of Bankless, criticized the CFTC’s enforcement actions. He viewed them as yet another attack on the DeFi sector.
Opyn, one of the targeted DeFi platforms, functions as an investment strategy platform. It had approximately $23 million in total volume locked (TVL) on its protocol at the time of the CFTC’s actions. ZeroEx, on the other hand, operates like an Ethereum [ETH]-based decentralized exchange.
Deridex, the third platform affected by the CFTC’s actions, was an Algorand [ALGO]-powered derivatives platform. However, the project unexpectedly ceased operations in February, resulting in a drop in TVL from approximately $150,000 to $133 as of September 8. according to to data from DefiLlama.
