SEC & CFTC claim that 1pool Ltd. aka 1Broker’s CEO Patrick Brunner was selling security swap schemes to the US and international investors. This was without following proper “discretionary investment thresholds”. It further claims that investors can directly open accounts by providing an email address and username, without any additional details. However, the accounts of investors as SEC claims can fund only by bitcoins.
SEC says that an undercover agent with FBI purchases several securities swaps from the US. They do this without meeting investment thresholds as per federal securities law requirement. However, this was not done via authenticating national exchange and fails to register as a security swap dealer, alleges SEC.
“The SEC protects U.S. investors on variety of platforms, regardless of the type of currency utilizing transactions,” says Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office.
He further adds “International companies that transact with U.S. investors cannot circumvent compliance with the federal securities laws by using cryptocurrency.”
Additionally, the SEC’S complaint files in the U.S. District Court for the District of Columbia. They seek permanent injunctions, disgorgement plus interest, and penalties. Moreover, the CFTC also announces the charges arising from similar conduct. As of now, the domain of 1Broker is seized by the FBI due to a violation. The violations includeAML standards, wire fraud laws, and operating an unregistered broker/dealer of securities.
1Broker announces to allow withdrawal of funds for US customers “if approves by the SEC”. The platform states in an initial tweet, “Statement about the SEC allegation”. All user funds are secure and they are fully cooperative with the authorities. If receives approval by the SEC, they will allow withdrawals for US customers ASAP. However, more details about the statement will be available.
Further, a tweet updating the active traders, says “All open positions halts at the current market prices. The price movements of a market will not affect the user trades from now on.”
A Crypto-security start, Blue Protocol took to its Twitter to reveal that it had inside sources. They claim that 1Broker isn’t the only exchange that will face SEC investigations and enforcement actions.
We’re hearing that 1Broker is not the only exchange that is going to see SEC enforcement shortly. If you want to be safe we recommend removing your crypto from centralized exchanges and keeping your funds in a decentralized wallet. If the withdraw option disappears it’s too late.
— Blue Protocol – Securing The Crypto Age (@Blue_Protocol) September 28, 2018
Go through some relevant news coverage:
- SEC Suspends the Trading of Two Cryptocurrency Products
- CFTC Claims My Big Coin Swindled $6 Million in a Crypto Fraud