SEC Penalizes Poloniex with $10M Fine Due to Unauthorized Exchange Operations

Sophia Cruz•Tuesday, August 10, 2021•1 min read

SEC Penalized Poloniex with $10M Fine Due to Unauthorized Exchange Operations

The US Securities and Exchange Commission has reported that Poloniex LLC has agreed to pay a whopping fine of more than $10 million, for operating an unregistered crypto exchange that utilizes buying and selling of digital assets as well as trading cryptocurrencies.

Throughout Poloniex’s operations, from July 2017 up to November 2019, it had created a trading platform that allows users to buy and sell cryptocurrencies without registering on a national securities exchange; failure to do so violates Section 5 of the Exchange Act. Though Poloniex met the criteria of an “exchange” under federal securities, by having an order book for tracking all of its transactions, it is not exempt from the registration policy. Poloniex’s aggressive approach towards increasing the company’s market shares resulted in choosing higher profits over compliance with the federal securities regulations.

Poloniex neither claims nor denies the SEC indictment, but still accepts the entry of a cease-and-desist order and has agreed to pay a total of $10,388,209.10. This includes $8,484,313.99 for disgorgement, $403,9995.12 for prejudgement interest, and $1.5 million in civil money penalties. The SEC also established a Fair Fund for the victims.

This order results from the SEC’s commitment to tightening the security of the cryptocurrency space, in order to eliminate fraud and lessen the risk for investors. The US Securities and Exchange Commission will continue its efforts, even if its investigations typically take between one to two years to complete.

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ABOUT THE AUTHOR See More

Sophia Cruz

Financial Writer - Asian & European Desks

Sophia is an experienced writer, reporter and newsdesk member, mostly on the financial sectors. For the past 5 years Sophia has covered a wide variety of topics such as the financial markets, economics, technology, fin-tech and trading. Sophia has been a part of the FX Leaders team since 2017 and works on producing valuable content and information for traders of all levels of experience.