CFTC Dishes Out Significant Fines on DeFi Protocols

• The CFTC has issued cease-and-desist orders against these DeFi platforms, along with the hefty fines.
• The agency dished out fines of $250,000, $200,000, and $100,000 against Opyn, ZeroEx, and Deridex.
• The regulator claims that Deridex and Opyn failed to follow the customer provisions set out in the Bank Secrecy Act.
• The three were also charged with illegally offering leveraged and margined retail commodity transactions in crypto.

The United States Commodity Futures Trading Commission is taking the crypto of decentralized finance (DeFi) very seriously and has dished out fines of $250,000, $200,000, and $100,000 and taken regulatory action against three decentralized finance protocols named Opyn, ZeroEx, and Deridex. The DeFi sector is also struggling with a drop in activity as compared to the 2021 crypto bull run.

As per a public statement released on September 8 by the CFTC, the regulatory authority has issued cease-and-desist orders against these DeFi platforms along with the hefty fines. Additionally, the agency charged DeFi platforms Deridex and Opyn for failing to register as a swap ution facility or designated contract market and failing to register as a futures commission merchant.

The CFTC also claimed that the Deridex and Opyn DeFi platforms failed to follow the customer provisions set out in the Bank Secrecy Act. The three DeFi platforms were also charged with illegally offering leveraged and margined retail commodity transactions in digital assets by the regulatory authority.

The CFTC director of enforcement, Ian McGinley, stated that DeFi platforms need to put in work to act within the confines of the law while adding that “somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts […] they do not.”

Today @CFTC issued orders against operators of three DeFi protocols for offering illegal digital asset derivatives trading. Learn more:

— CFTC (@CFTC) September 7, 2023

“The DeFi space may be novel, complex, and evolving, but the Division of Enforcement will continue to evolve with it and aggressively pursue those who operate unregistered platforms that allow U.S. persons to trade digital asset derivatives,” McGinley said

It is important to mention here that Opyn is a DeFi investment strategy platform with a TVL of around $23 million, while ZeroEx is an Ethereum-based decentralized exchange. On the other hand, Deridex was an Algorand-powered derivatives platform that announced its closure in February

As per an earlier report from Bitnation, a bipartisan bill sponsored by US Senator Jack Reed was introduced in the Senate on July 18 with the goal of regulating the DeFi space. The bill seeks to tighten KYC and AML regulations, along with sanctions requirements for DeFi.