The CFTC has settled charges against the companies behind 0x (ZRX), two other DeFi protocols
Date: 2023-09-09 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
The US Commodity Futures Trading Commission (CFTC) has decided to settle settlements with several DeFi companies, according to a press release dated September 7. This organization is a counterpart to the Securities and Exchange Commission, or SEC, the regulator of the cryptocurrency securities market.
CFTC Director of Enforcement Ian McGinley wrote:
Probably at this stage, DeFi operators have put forward the idea that illegal transactions become legal at the moment when they are facilitated by smart contracts... They do not do this.
The CFTC primarily targeted ZeroEx Inc, which is best known for developing the 0x protocol. According to the agency, ZeroEx also offered an interface called Matcha, trading third-party tokens for access to BTC or ETH and other leveraged assets. The CFTC said in a statement that these leveraged tokens are commodities and are only traded on official exchanges.
0x was once seen as a promising foundation for Ethereum-based decentralized exchanges, before current market leaders such as Uniswap.
Long term trading volumes are no longer available and the market ranking can help give an idea of 0x's former popularity. 0x's ZRX token was frequently included in the list of the 30 largest tokens by market capitalization for 2018. Today, ZRX ranks below the 700 largest cryptocurrencies, and UNI Uniswap is the 24th largest of all currencies currently in use. The CFTC's latest action is significant as it takes aim at one of DeFi's past top contenders.
Opyn, Ethereum's decentralized investment platform, and stablecoins are being targeted by the CFTC. The CFTC has announced that Opyn's oSQTH tokens are purely commodities and are only traded on officially established exchanges. The price of the oSQTH token is set by the square of the EFI-to/USDC index managed by the company.
In turn, the CFTC took aim at Deridex, a defunct trading platform that was founded only by Algorand. The CFTC reports that Deridex perpetual contracts based on the reference value of the STABL2 token and other asset are treated as a commodity.
Each platform faced multiple charges
In addition to these specific violations, the CFTC charged Deridex and Opyn with repeated registration denials due to failure to comply with Bank Secrecy Act customer identification programs. The ZeroEx representative is not named as a defendant in the charges.
Additionally, the agency accused all three platforms of illegally offering retail commodity transactions using leveraged funds and margins in digital assets. Each company must stop violating any of the rules.
Each company was hit with different fines by the CFTC. Opyn must pay $250,000, ZeroEx will pay $200,000 and Deridex will receive $100,000. The agency said it had reached those communities around the time the charges were filed.
These charges are part of a growing list of cryptocurrency-related actions by the CFTC. It was this week that the agency concluded a fraud case involving Mirror Trading International and took action against one of the pool operators. In the recent past, the CFTC has already targeted some major crypto companies such as Binance, FTX and Tether.
