The Seychelles-registered cryptocurrency brokerage firm, Falcon Labs, has been ordered by the U.S. Commodity Futures Trading Commission (CFTC) to pay a settlement of nearly $2 million for regulatory violations. This marks the first action taken by the regulator against an unregistered futures commission merchant (FCM).
As part of the settlement, Falcon Labs must cease acting as an unregistered FCM and providing U.S. individuals with access to digital asset derivatives trading platforms. The company is required to pay $1,179,008 in disgorgement and a civil monetary penalty of $589,504.
The CFTC found that Falcon Labs had solicited or accepted orders from customers based in the U.S. between October 2021 and March 27th, 2023. During this period, the firm acted as an intermediary, facilitating customer trading on various digital asset exchanges, including institutional clients in the U.S. Falcon Labs granted its customers direct access to exchanges by creating a main account in its own name and subsequent sub-accounts. Customer-identifying information was not consistently provided to the exchanges for the sub-account holders.
The settlement with Falcon Labs comes shortly after CFTC Chair, Rostin Behnam, cautioned that the cryptocurrency industry could anticipate another wave of enforcement actions within the next six to 18 or 24 months.
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