The CFTC, also known as the United States Commodity Futures Trading Commission, has recently announced that it has taken legal action against Falcon Labs, a cryptocurrency brokerage firm. The charges filed against Falcon Labs resulted in a settlement of approximately $1.8 million in disgorgement and penalties.
According to the CFTC, Falcon Labs, which is owned by FalconX, failed to register as a futures commission merchant and inappropriately allowed access to digital asset exchanges. As part of the settlement, FalconX has agreed to stop offering its services to U.S. residents and pay around $1.2 million in disgorgement and $600,000 in civil monetary penalties.
Enforcement Director Ian McGinley expressed the CFTC’s stance on the matter, stating that the agency will not tolerate digital asset exchanges that fail to register or comply with the rules set by the CFTC to maintain integrity in the derivatives markets. He also highlighted that this is the first time the CFTC has charged an intermediary for facilitating improper access to these exchanges.
The settlement claimed that FalconX facilitated orders for digital asset derivatives for U.S. users through its “Edge” product from October 2021 to March 2023. The CFTC noted that FalconX has made improvements to its practices voluntarily following its legal dispute with Binance and former CEO Changpeng Zhao, which resulted in a settlement of $4.3 billion in November 203.
The CFTC acknowledged FalconX’s cooperation and efforts to remedy the situation, leading to a reduced penalty. It is important to note that FalconX did not admit or deny any of the regulator’s findings or conclusions, as stated in the CFTC order. Cointelegraph attempted to contact FalconX for a comment but did not receive a response at the time of publication.
CFTC Chair Rostin Behnam recently stated that crypto firms operating in the U.S. can expect further enforcement actions within the next two years. In 2023, the commodities regulator filed a total of 47 enforcement actions against crypto firms.
Overall, it is evident that U.S. enforcement agencies are increasing their efforts to combat crypto-related crimes, signaling a heightened focus on regulating the industry.