1Pool Ltd., an international security dealing company, together with its CEO and owner, Patrick Brunner was found guilty by the Federal court, for running an illegal Bitcoin operation. They are now facing fines worth almost a million dollars, the Commodity Futures Trading Commission (CFTC) announced on March 11, 2019.
The investigation was carried out by the joint effort of the CTFC, the Securities Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI).
The Marshall Islands-based company was not registered as a futures commission merchant (FCM) yet it continued to have transactions margined in bitcoin. It lacked properly operational, anti-money laundering (AML) protocols which are a necessity as far as the supervisory duties of the company are concerned. A civil monetary penalty of $175,000 has been imposed on the company along with reimbursement of $246,000 of gains.
They were also directed to pay to all known US customers the BTC that they hold in customers’ accounts. The fine further includes the defendants’ certification repaid to U.S. customers amounting to about 93 bitcoins, valued at approximately $570,000. Cumulatively, the defendants are paying up to $990,000 in the resolution of the CFTC action.
The CFTC’s director of enforcement, James McDonald, took the opportunity to sound a warning to other such operators. He stated: “Intermediaries should take notice that they will be held accountable by the CFTC for failing to comply with registration requirements and failing to implement policies and procedures that are crucial in protecting U.S. customers and our markets. Through the Division’s Bank Secrecy Task Force, Enforcement will continue to investigate and prosecute such violations.”
The Bank Secrecy Task Force is a coordinated effort within the commission that targets financial entities that fail to comply with AML and KYC requirements.
The CFTC has previously charged other crypto startups and their founders with similar crimes. Last month, it charged My Big Coin founder with fraud and unlawful monetary transactions.