Cryptocurrency Exchange Poloniex Hit With SEC Penalty

Cryptocurrency exchange Poloniex is agreeing to pay the U.S. Securities and Exchange Commission (SEC) a $10.4 million settlement charge for operating an unregistered digital asset exchange, according to the SEC and multiple news agencies on Monday (Aug. 9).

“Without admitting or denying the SEC’s findings, Poloniex agreed to the entry of a cease-and-desist order and agreed to pay disgorgement of $8,484,313, prejudgment interest of $403,995, and a civil penalty of $1.5 million for a total of $10,388,309.  The order establishes a Fair Fund for the benefit of victims,” according to the SEC’s press release.

Read more: SEC Chair Gensler Wants More Crypto Oversight Authority

The U.S. regulator said Poloniex agreed to settle without admitting or denying the charges. Launched in 2014, Poloniex was acquired in 2018 by the payments and digital currency firm Circle and has top-level investors such as Goldman Sachs Group Inc.

See also: ​​Circle Buys Crypto Exchange

Circle announced last month it plans to go public later this year through a merger with special purpose acquisition company (SPAC) Concord Acquisition Corp in a deal that would value the crypto firm at $4.5 billion.

Also read: Global FinTech Circle Going Public With SPAC At $4.5B Valuation

According to the SEC’s settlement order, Poloniex operated a web-based global trading platform from July 2017 through November 2019 that enabled the buying and selling of digital assets that were “investment contracts and therefore securities,” according to the SEC. 

Aside from not registering as a national securities exchange with regulators, the SEC also pointed out that the company operated as a trading platform.

See also: Coinbase Says Crypto Exchanges Face Dual Regulations To Meet Differing Authentication Rules

“Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange,” said Kristina Littman, chief of the SEC enforcement division’s cyber unit, per the SEC statement.