On July 13th the Commodity Futures Trading Commission (CFTC) from the United States, issued an order to indict and settle charges against two companies. The same day the Securities and Exchange Commission (SEC) announced that it had reached agreement with the defendants before initiating a separate procedure to discontinue activities.
Misconduct and SEC processing
The two defendants operate from Manila in the Philippines and Mountain View in California and are called “Plutus Technologies Philippines Corporation” and “Plutus Financial, Inc. d / b / a Abra”, respectively.
The statement says: “Abra is a privately held, California-based company that offers a mobile app that can be used to process financial transactions through contracts registered on the Bitcoin blockchain.”
According to the SEC, this application is pending Users could carry out financial transactions with Abra or Plutus Tech act as counterparty.
Users were asked to fund their accounts by depositing US dollars, Bitcoin (BTC) or other assets As of March 2018, they were able to contract to gain synthetic exposure to the price movements of dozens of currencies. including the euro and the Mexican peso.
As of February 2019, Abra expanded its business to allow users to sign contracts that allow synthetic exposure to it Price movement of US stocks and exchange-traded mutual funds (ETF for its acronym in English). The advertising campaign of the offer would have shown that the users of the application would not have been obliged to undergo the “Know your customer” procedure.
After talks with the SEC Abra ceased offering these contracts, but resumed the offer in the second half of 2019, while trying to limit it to non-residents of the United States:
“In particular, the companies said that foreign investors would sign contracts with Plutus Tech, a private Filipino company that is partly owned by Abra and depends on him and whose employees are responsible for most of the business in California.”
According to the SEC Contract design, investor application, marketing and hedging management through US equity and ETF purchases were carried out by the California team. In addition, despite the investigations and controls of both companies, Plutus Tech appears to have signed contracts with five people in the United States.
The CFTC was of the opinion that the contracts in question were value-based exchanges and were offered and sold to unsuitable participants without an effective registration declaration.what a violation of Securities law from the United States.
Also, These offers violate the Stock Exchange Act for transactions with U.S. and foreign retail investors outside of a registered national exchange.
Both companies are taking corrective action that has been accepted by the SEC. and they will comply with the penalties that oblige them to stop operating in violation of the securities laws. Also, They will jointly pay a fine of $ 150,000.
The CFTC agreement
The CFTC asked the two defendants to do so You are fined $ 150,000 and stop continuing to violate the Stock Exchange Act.
These fouls include the illegal offering of exchanges (or swaps) to US and foreign customers that were carried out without being subject to the rules of a chamber of commerce known as a contract market. They also include operate illegally as an unregistered broker for futures commissions.