Poloniex to pay $10M to settle SEC charges that it operated unregistered crypto exchange


Poloniex LLC agreed to pay more than $10 million to settle a complaint by the U.S. Securities and Exchange Commission (SEC) alleging that it operated an unregistered cryptocurrency exchange.

The SEC alleged that Poloniex violated Section 5 of the Exchange Act for failing to register its cryptocurrency trading platform between July 2017 and November 2019. Its digital assets trading platform was available to institutional and retail investors including residents of the United States.

The Commission found that the company’s cryptocurrency trading platform met the criteria of an “exchange” under the securities laws since it is providing non-discretionary means for trading orders. Traders interact and execute their orders using the Poloniex website, an order book, and the company’s trading engine.

Additionally, the SEC found in August 2017, Poloniex stated internally its intention to be “aggressive” in making available for trading new digital assets in its exchange. Its plan included digital assets possibly considered as securities under the Howey test. The company’s goal was to increase its market share.