Illegal Transactions in Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC) Get Trading Firm in Trouble with CFTC

On Sept. 28, trading company Laino Group Limited (doing business as PaxForex) was slapped with a civil enforcement action by the CFTC.

The St. Vincent-based firm, which is also registered in the Grenadines, was allegedly offering leveraged trading in Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and even precious metals without registering as a futures commission merchant (FCM) with the commodities regulator.

Illegal margin trades

PaxForex is accused of violating the Commodity Exchange Act (CEA) that regulates commodities trading activities on the federal level.

Even though the firm is registered outside of the U.S., it was doing business with American retail investors through local employees and agents.

The defendant was accepting cash and securities, as well as the aforementioned commodities, in exchange for margin trades.

By taking enforcement action, the CFTC is seeking to return illegally obtained funds from the wrongdoer and force PaxForex to pay additional penalties during the litigation process. The firm will also be permanently banned from trading.

This crackdown has more far-reaching implications for the cryptocurrency industry given that the CFTC has once again confirmed that it recognizes BTC, ETH and LTC as commodities.

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The CFTC's James McDonald claims that the agency remains committed to enforcing regulations. Anyone who intends to commit funds to a certain firm whose registration is lacking should treat that as a red flag:

This action shows the CFTC’s continued commitment to ensuring that entities offering leveraged, retail transactions within our jurisdiction—including those involving digital assets—register with the CFTC.

It is far from the only crypto-focused company to draw regulatory ire this year. As reported by U.Today, the CFTC and the SEC announced parallel enforcement actions against California-based investment platform Abra for illegally offering security-based swaps back in July.