According to the SEC, the Poloniex exchange violated the securities law. Poloniex agreed with the submission to cease illegal actions and pay the fine.
The Securities and Exchange Commission order states that from July 2017 to November 2019, Poloniex used a trading platform that was not registered and performed digital asset exchange transactions, including digital assets that could be considered “investment contracts” and therefore securities.
The criterion for digital assets that can be classified as “investment contracts” is confirmed by the Howey test. Since the test is positive and transactions on the Poloniex exchange are subject to the Securities Act of 1933 and the Securities Exchange Act of 1934, they are considered securities and transactions must be subject to certain disclosure requirements. and registration.
The SEC draws attention to the fact that Poloniex ignored the Commission’s warnings, having full information about illegal activities. In contrast, Poloniex has “stepped up its aggressive activities” in promoting new “investment digital assets” on the trading platform.
“Poloniex has opted to increase profits over complying with federal securities laws by listing digital asset securities on its unlisted exchange,” said Kristina Littman, chief of cyber security at the SEC. “Poloniex has attempted to circumvent the Securities and Exchange Commission’s regulatory regime that applies to any market to bring together buyers and sellers of securities, regardless of technology.”
Without admitting or refuting the SEC’s findings, Poloniex agreed to the cease-and-desist order and will pay compensation in the amount of $ 8.48 million, interest for the adjudication of $ 404,000 and a civil fine of $ 1.5 million, about $ 10.4 million in total.
In May of this year, the Ontario Canadian Securities Commission (OSC) also accused cryptocurrency exchange Poloniex of violating securities law.
