U.S. authorities have settled allegations with an app developer for facilitating illegal derivatives trades.
Both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) issued orders settling charges against California-based Plutus Financial Inc. doing business as Abra and Plutus Technologies Philippines Corp. for violating securities and derivatives rules by entering into illegal off-exchange swaps in digital assets and foreign currency.
According to the SEC’s order, Abra developed an app that allowed users to bet on price movements in U.S. stocks and ETFs through blockchain-based transactions.
The order finds that these contracts amounted to security-based swaps subject to U.S. securities laws, and as a result, the firms violated securities laws by trading unregistered swaps.
Without admitting or denying the allegations, the firms agreed to a cease-and-desist order and to pay a combined penalty of US$150,000.
“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 the CFTC’s director of enforcement, James McDonald.
“Rooting out misconduct is essential to furthering the responsible development of these innovative financial products,” McDonald said.