SEC charges bitcoin-funded securities dealer

September 28, 2018
Chris Wheal

The US Securities and Exchange Commission (SEC) filed charges on Thursday against an international dealer offering bitcoin-backed securities on a platform that violates US regulatory compliance.

SEC alleges dealer circumvented federal securities laws

Marshall Islands-based 1pool, which provides crypto-related services including dealer, is alleged to have violated federal securities laws in connection with the sale of securites-based swaps funded with bitcoin.

Insufficient customer details

The SEC accuses 1pool and its chief executive of the broker Patrick Brunner of soliciting investors in the US to buy swaps available on a trading platform where customers can open accounts merely by providing an email address and a user name. Furthermore, customers could only fund their accounts using bitcoin.

No additional information was required by the broker, violating know-your-customer and anti-money laundering regulations that require more detailed identification such the customer’s risk profile.

FBI investigation

A special agent with the Federal Bureau of Investigation (FBI), acting undercover, is alleged to have successfully purchased several security-based swaps on the 1broker platform despite failing to meet discretionary investment thresholds required by federal securities laws.

The SEC complaint was filed in the US District Court for the District of Columbia and seeks permanent injunctions, plus interest and penalties.

Unregistered exchange

“The SEC protects US investors across a variety of platforms, regardless of the type of currency used in their transactions,” said Shamoil T Shipchandler, director of the SEC’s Fort Worth regional office.

“International companies that transact with US investors cannot circumvent compliance with the federal securities laws by using cryptocurrency.”

The SEC also charged the company for selling securities on an unregistered exchange and that it failed to register as a security-based swaps dealer.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

Related News

July 18, 2019: Top Gainers and Losers (24h) on OpenLedger DEX July 18, 2019
July 17, 2019: Top Gainers and Losers (24h) on OpenLedger DEX July 17, 2019

Leave a Reply

Your email address will not be published. Required fields are marked *