Cryptocurrency prime brokerage firm, Falcon Labs, based in Seychelles, has been sanctioned by the regulatory body, the Committee on Commodity Futures Trading (CFTC), for violating rules in the American market.
The CFTC reports that Falcon Labs allowed US residents to access crypto derivatives platforms without proper registration, enabling them to trade on an unregistered basis. This unauthorized activity took place between October 2021 and March 2023, during which Falcon Labs acted as an intermediary for American users, facilitating their orders and trades for digital asset derivatives without the required registration.
Falcon Labs went even further by becoming the main account holders for these transactions, allowing individuals involved to create sub-accounts without providing any identification proof. These illicit activities resulted in Falcon Labs earning net fees of approximately $1,179,000 from clients’ dealings in virtual asset derivatives. As a result, the CFTC holds Falcon Labs accountable for this violation and has imposed a significant financial penalty.
To address the seriousness of the situation, Falcon Labs must immediately cease participating in these unregistered activities and pay $1,768,512 million in disgorgement and civil monetary penalties fines.
CFTC Enforcement Director Ian McGinley emphasizes the regulatory body’s commitment to maintaining the integrity of derivatives markets and taking action against those involved in unregistered digital asset services. While Falcon Labs has made efforts to enhance its Identity Management controls for customers, these measures may not be sufficient to absolve the company from the consequences of its past misconduct.
