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Swiss Securities Dealer Face Charges and Settlement on the Same Day

Swiss securities firm XBT Corp. SARL ended October facing charges from the US SEC. However, the company also closed the month agreeing to a settlement with the Commodity Futures Trading Commission.

The Securities and Exchange Commission (SEC) of the United States announced that it had filed charges XBT Corp. SARL for targeting investors to use cryptocurrencies to purchase investment products. Conversely, the Commodity Futures Trading Commission (CFTC) agreed to settle with XBT Corp. over similar charges.

Unregistered Security-Based Swaps

According to the SEC statement, the Switzerland-based dealer offered and sold security-based swaps that were unregistered to American investors. The Swiss company which operated under the banner of First Global Credit, reportedly didn’t comply with the prerequisites for registration and exchange mandated for security-based swaps.

The SEC also stated that XBT Corp. SARL utilized several marketing strategies to tempt US citizens into purchasing and selling different investment products using Bitcoin (BTC). The securities dealer allegedly used different parlance to describe the products it was offering, like “Bitcoin Asset Linked Notes.”

David Peavler on the Issue

According to David Peavler, the regional director of the Securities Commission’s Fort Worth office, federal laws impose particular requirements for offering and selling security swaps to retail investors in the country. The prerequisites of the exchanges can’t be avoided by directly calling the transactions by another name. The policies also won’t be changed by funding it with cryptocurrencies.

The SEC stated that XBT Corp. SARL also neglected to conduct its security-based swaps on a licensed national exchange platform. It also missed registering properly as a security-centric swaps dealer.

XBT Corp. SARL reportedly conceded to a cease-and-desist order without admitting or denying the SEC’s claims. The company is set to pay a penalty of $100,000 and a disgorgement of $31,687.

A similar situation happened with the Commodity Futures Trading Commission. The CFTC also filed charges against XBT Corp. SARL for failing to register with them as a futures commission merchant (FCM).

The CFTC also took a page out of the SEC’s book and demanded that the European company pay $100,000 in civil monetary penalties and in disgorge gains that it received concerning the violations committed. The dealer will also stop violating the decrees of the Commodity Exchange Act (CEA).

The Director of Enforcement, James McDonald, said the decisions made in the case showed that the CFTC will hold its brokers accountable if they accept or solicit orders without registering correctly with the Trading Commission.

He also noted that the case emphasized the CFTC’s commitment to work with their regulatory partners and law enforcement to safeguard market integrity.

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