The United States’ Securities and Exchange Commission this morning continued its crackdown on the cryptocurrency space. The agency this morning announced that it has entered into a settlement arrangement with that of Poloniex LLC related to the firms operation of a trading platform for digital securities.
The settlement will see Poloniex pay “more than $10.0 million” in connection with the firms operation of an unregistered exchange. The charges relate to the period of July 2017 through to November 2019, when the LLC owner and operated the exchange prior to selling off its platform. The platform at the time was acquired by Circle, whom recently filed to go public via a SPAC transaction with Concord Acquisition Corp (NYSE: CND) valued at $4.5 billion.
Furthermore, Circle is the owner of Poloniex LLC, with the one-time owner of the exchange being left to cover the legal costs of the asset in which it no longer owns. Circle reportedly acquired Poloniex in early 2018, before selling off the asset in November 2019. In recent filings for its SPAC transaction, the company had revealed that it set aside $10.4 million for a settlement arrangement with the SEC related to the asset.
Commenting on the settlement, the SEC identified that the exchange elected to offer assets for exchange that may be considered securities as it looked to aggressively improve its market share. “Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange. Poloniex attempted to circumvent the SEC’s regulatory regime, which applies to any marketplace for bringing together buyers and sellers of securities regardless of the applied technology,” said Kristina Littman, Chief of the SEC’s Cyber Unit.
While the company did not admit or deny the SEC’s charges, Poloniex, and thereby Circle, has agreed to pay out a total of $10.4 million in settlements, of which $1.5 million consists of a civil penalty, $0.4 million consists of prejudgement interest, and the majority, $8.5 million, relates to disgorgement.
Poloniex, in its current exchange form which is no longer owned by Circle, continues to operate as a digital exchange. It is unclear if the currently operating entity is a target of the SEC, however it appears likely based on today’s settlement with the prior owners of the exchange.
Concord Acquisition Corp last traded at $10.43 on the NYSE.
Information for this briefing was found via the SEC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.