April 19, 2024
US CFTC Takes Regulatory Action Against DeFi Protocols Opyn, ZeroEx, and Deridex
Policy & Regulation

US CFTC Takes Regulatory Action Against DeFi Protocols Opyn, ZeroEx, and Deridex

Three decentralized finance protocols are being subjected to regulatory action by the US Commodity Futures Trading Commission because they allegedly didn’t register multiple derivatives trading services.

In a statement on September 8, the American commodities regulator said it had issued orders against the protocols Opyn, ZeroEx, and Deridex.

Deridex and Opyn were accused of failing to register as a designated contract market, a swap execution facility, and a futures commission merchant, respectively. The CFTC claimed that the two methods also did not adhere to the Bank Secrecy Act’s client obligations.

Additionally, all three companies were accused of providing unauthorized leveraged and margined consumer commodity transactions in digital assets.

Opyn, ZeroEx, and Deridex are required by the CFTC’s orders to pay fines of $250,000, $200,000, and $100,000, as well as to stop breaking the rules set forth by the CFTC and the Commodity Exchange Act. The businesses have agreed to pay the fines.

The CFTC’s director of enforcement, Ian McGinley, stated that DeFi platforms must work more proactively to comply with the law:

“Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts, but they do not,” McGinley stated, adding:

“The DeFi space may be novel, complex, and evolving, but the Division of Enforcement will continue to evolve with it and aggressively pursue those who operate unregistered platforms that allow U.S. persons to trade digital asset derivatives.”

CFTC’s director of enforcement, Ian McGinley

The CFTC’s orders did not meet with universal approval.

Ryan Sean Adams, a co-host of Bankless, described the CFTC’s legal action as yet another assault on DeFi.

ZeroEx is an Ethereum-based decentralized exchange, and Opyn is a DeFi investment strategy platform with $23 million in total volume locked (TVL) on its protocol.

Deridex was a derivatives trading platform powered by Algorand. Nevertheless, the initiative abruptly ended in February, resulting in a decline in TVL from roughly $150,000 to $133 as of September 8 (DefiLlama).

Image: Freepik

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