Poloniex To Pay $10 Million to SEC for Operating an Unregistered Exchange

Poloniex resolved charges with the US SEC for operating an unregistered online digital asset exchange.

Poloniex To Pay $10 Million to SEC to Settle Charges for Operating an Unregistered Exchange
Poloniex settles with SEC

According to the US Securities and Exchange Commission (SEC), Poloniex has agreed to pay more than $10 million to settle charges for operating an unregistered exchange in connection with its operation of a trading platform that helped to buy and sell digital asset securities.

Also, SEC said that the Poloniex trading platform met the criteria of an “exchange" but failed to register.

On August 9, SEC said that Poloniex operated a web-based trading platform that facilitated buying and selling digital assets, including digital assets that were investment contracts and therefore securities.

The platform did this between July 2017 and November 2019 without properly registering as a securities broker. As a result, they violate the Section 5 of the Exchange Act.

Following this, the Commission’s enforcement chief Kristina Littman said,

“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.”

Base on the SEC’s report, Poloniex has neither admitted nor denied any wrongdoings. However, it will pay a fine of around $10.3 million while agreeing to a cease-and-desist order. Poloniex would also pay $8.48 million of the total fine in disgorgement and a $1.5-million public penalty in addition to over $403,000 in prejudgment interest.