Crypto exchange Kraken hit with $1.25m fine; Ted Cruz and banks oppose OCC pick
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The US CFTC (Commodity Futures Trading Commission) isn’t letting the SEC have all the crypto-regulatory fun. It’s just whacked a biggish fine on global crypto exchange Kraken.
The regulatory body has settled a US$1.25 million penalty with the large exchange, on the grounds Kraken failed to register as a futures merchant.
Here’s the CFTC statement if you fancy a dry read. But, in a red, white and blue nutshell, it says that…
• Kraken illegally offered margined retail commodities to investors between June 2020 and July 2021.
• After the exchange changed its policy on margin trading, users were unable to withdraw assets until repaying obligations in a 28-day window.
• Kraken was apparently able to “unilaterally liquidate positions if users did not make repayments within 28 days of exiting a contract”.
• “These transactions were unlawful because they were required to take place on a designated contract market and did not.”
• The exchange must cease and desist from further violations of the Commodity Exchange Act.
Enforcement actions are usually bad news, but this seems quite positive. Kraken made a good deal & solved an open regulatory issue, CFTC got a win & asserted its authority, & Comm'r Stump wrote a good statement calling for clarity. I have to think everyone's happy with this one. https://t.co/I4kIceYz3J
— Jake Chervinsky (@jchervinsky) September 29, 2021
The fine is nothing compared to the US$100 million the CFTC and FinCEN collected from crypto derivatives exchange BitMEX in August. Although, circumstances regarding that penalty run a little deeper than the Kraken settlement.
In March, too, Coinbase was fined US$6.5 million by the CFTC over allegedly failing to control wash trading. Coinbase Pro shut down margin trading earlier this year in response.
Meanwhile… outspoken Texas Republican Senator Ted Cruz, is one of numerous prominent voices opposed to Joe Biden’s nomination of crypto and big-bank critic Saule Omarova as the next head of the OCC (Office of the Comptroller of the Currency).
It’s an influential position that was formerly held by the crypto-friendly Brian Brooks during the Trump administration. Brooks subsequently took on the job of Binance US CEO, but has since resigned from that role.
Democrats hate crypto currencies.
They don’t understand them, but Dems want to destroy them.
— Ted Cruz (@tedcruz) September 29, 2021
As a noted global-warming sceptic AND an increasingly passionate crypto supporter, Cruz is a polarising figure in the US political landscape.
He’s the cryptocurrency advocate other US crypto supporters didn’t necessarily want, or know they needed.
El Salvador mining Bitcoin with volcano power and Ted Cruz stumping for the crypto industry.
— samiayub.eth (@samstargazer) September 29, 2021
“Not only is Saule Omarova, Biden’s pick to lead the OCC, a threat to our traditional economy, she also wants to regulate crypto into oblivion,” Cruz said in a separate tweet. “Crypto faces future-defining government regulations. This nomination needs to be stopped.”
And according to Cointelegraph, several big US banks are also firmly against the Omarova nomination, with the American Bankers Association (ABA) considering publicly fighting the decision.
In a statement last week, ABA President and CEO Rob Nichols said: “We have serious concerns about her [Omarova’s] ideas for fundamentally restructuring the nation’s banking system.”
Omarova is a professor at New York’s Cornell University Law School and has previously claimed that the rise of cryptocurrencies is “benefitting mainly the dysfunctional financial system we already have.”
She has also said she would like to “end banking as we know it”.
Is the crypto industry on the same self-serving side as big banks? That’d be a no, generally speaking, but when it comes to certain regulators and politicians, survival motivations align.
Either way, “weird times” indeed and the political divide over crypto appears to be widening by the day…
Saule Omarova's nomination to lead the @USOCC is tremendous news. She is an excellent choice to oversee and regulate the activities of our nation's largest banks and I have no doubt she'll be a fearless champion for consumers. https://t.co/zW6DqO8lUl
— Elizabeth Warren (@SenWarren) September 23, 2021