Both the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have filed charges against 1pool Ltd., also known as 1Broker, and its Austria-based CEO for allegedly selling security swaps funded with bitcoin, violating federal security laws.
In the press release issued by the SEC, it details that 1Broker “registered in the Republic of the Marshall Islands, and its CEO Patrick Brunner solicited investors from the United States and around the world to buy and sell security-based swaps.”
The SEC claims investors could open an account by providing only an email address and by selecting a username. Users could only use bitcoin to fund their accounts. The agency alleges an undercover Special Agent of the Federal Bureau of Investigation (FBI) was able to purchase several security-based swaps on 1Broker’s platform “despite not meeting the discretionary investment thresholds required by the federal securities laws.” The FBI has since seized the 1Broker domain.
The SEC claims, additionally, that Brunner and Broker1 failed to transact on a registered national exchange and failed to register as a security swaps dealer.
“The SEC protects U.S. investors across a variety of platforms, regardless of the type of currency used in their transactions…International companies that transact with U.S. investors cannot circumvent compliance with the federal securities laws by using cryptocurrency,” said Shamoil T. Shipchandler, Director of the agency’s Fort Worth Regional Office.
The CFTC made similar charges in their filed complaint against 1Broker. They allege the company “illegally offering off-exchange, retail commodity transactions to U.S. customers without being registered with Plaintiff Commodity Futures Trading Commission (“Commission”), and they are failing to implement adequate anti-money laundering and related supervisory procedures that such registration entails.”
Regardless of the actions being taken here, this is an example of the importance of properly securing your bitcoin or other cryptocurrencies. No matter the platform, whether it be regulated or not, your cryptos, such as bitcoin, are more secure when held in a decentralized local wallet or in an offline hardware wallet. If you leave cryptocurrency on a centralized exchange, actions taken against those platforms by various actors can cause you to lose those token or be left unable to access them for an uncertain amount of time.