Release Number 8201-20
CFTC Sanctions Two Firms Offering Digital Asset-Based Swaps for Illegal Off-Exchange Trading and Registration Violations
July 13, 2020
Washington, D.C. — The Commodity Futures Trading Commission today issued an order filing and settling charges against respondents Plutus Financial, Inc. d/b/a Abra of California, and Plutus Technologies Philippines Corp. d/b/a Abra International of the Philippines for entering into illegal off-exchange swaps in digital assets and foreign currency with U.S. and overseas customers and registration violations. This case was brought in connection with the Division of Enforcement’s Digital Asset Task Force.
The order requires the respondents to pay a $150,000 civil monetary penalty and to cease and desist from further violations of the Commodity Exchange Act (CEA), as charged. In a parallel enforcement action, the Securities and Exchange Commission (SEC) announced a settlement with the respondents arising from similar misconduct.
“This case underscores, once again, that the Commission will continue working with our regulatory partners to ensure the integrity of our markets, including those involving digital assets,” said CFTC Director of Enforcement James McDonald. “Rooting out misconduct is essential to furthering the responsible development of these innovative financial products.”
The CFTC’s order finds that from approximately December 2017 to October 2019, the respondents accepted orders for and entered into thousands of digital asset and foreign currency-based contracts via a mobile phone application. These contracts, which constituted swaps under the CEA, enabled customers to enter into financial transactions, with the respondents acting as the counterparty, to gain exposure to price movements of over seventy-five digital assets. By entering into these contracts via their app, respondents violated Section 2(e) of the CEA, which makes it unlawful for any person, other than an eligible contract participant, to enter into a swap unless the swap is entered into on, or subject to the rules of, a board of trade designated as a contract market. Additionally, in soliciting and accepting orders for these contracts, the respondents illegally operated as an unregistered futures commission merchant.
The CFTC acknowledges and thanks the SEC for their assistance in this matter.
The Division of Enforcement staff members responsible for this case are Jonah E. McCarthy, Dmitriy Vilenskiy, Traci L. Rodriguez, and Paul G. Hayeck. Philip W. Raimondi of the Division of Market Oversight also assisted in this matter.