Regulation News

CFTC Charges DeFi Protocols for AML Violations and Unlicensed Operations

CFTC fines DeFi protocols Opyn, ZeroEx, and Deridex, igniting debates on innovation and regulation in the industry.
CFTC Charges DeFi Protocols for AML Violations and Unlicensed Operations

On September 8th, the U.S. Commodity Futures Trading Commission (CFTC) resolved charges against three decentralized finance (DeFi) companies. According to the CFTC, Opyn, ZeroEx, and Deridex have not complied with AML regulations and other licensing standards. Furthermore, the move attempts to include DeFi operators within the framework of current financial rules.

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Tightening of Licensing Restrictions

The accused DeFi platforms allegedly ran their operations without the proper U.S. authorizations. In addition to fines for failing to restrict access to their media from inside the United States, Opyn and Deridex were charged with operating without being registered as a swap execution facility or designated contract market. 

Furthermore, the customer requirements of the Bank Secrecy Act were not met during these operations.

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CFTC’s Findings and Sentence

As a result, Opyn, ZeroEx, and Deridex settled with the CFTC for $250,000, $200,000, and $100,000 respectively. Nonetheless, the CFTC’s decision has been criticized, including a public dissent statement by CFTC Commissioner Summer K. Mersinger claiming regulatory procedures limit innovation rather than support responsible growth in the DeFi industry.

While the DeFi community works through the fallout from these allegations, the CFTC has designed to bring this decentralized industry within its jurisdiction. The Director of Enforcement of the Commodity Futures Trading Commission, Ian McGinley, stated:

“Unlawful transactions do not become lawful when facilitated by smart contracts.”

Hence, as DeFi grows and attracts mainstream attention, these cases may serve as a wake-up call for the industry. Moreover, regulatory compliance can no longer be an afterthought since it needs to be at the forefront of DeFi development and operations.

Despite the uniqueness and complexity of the DeFi space, it is evident that it must develop in conjunction with current legal frameworks if it is to grow sustainably. Moreover, the innovation potential might be severely hindered if regulatory interventions are maintained.

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Kelvin Munene Murithi

Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.

Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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