Crypto Exchange Kraken To Pay $1,250,000 Fine for Providing Illegal Leveraged Trading to US Customers

Crypto exchange Kraken must pay a hefty fine for providing illegal trading services in the US.

In a statement published on Tuesday, the Commodity Futures Trading Commission (CFTC) says that it issued an order requiring Kraken to pay $1.25 million in civil monetary penalties after finding that the exchange offered margined retail commodity transactions in Bitcoin (BTC) and other digital assets to ineligible US customers.


The order also requires the exchange to cease and desist from further violations of the Commodity Exchange Act (CEA).

The CFTC says that between June 2020 and July 2021, Kraken offered margin trading services while maintaining sole custody of these assets. Customers were required to exit their positions and repay the exchange within 28 days. Otherwise, Kraken could liquidate their margin positions.

“Kraken could also initiate a forced liquidation if the value of the collateral dipped below a certain threshold percentage of the total outstanding margin. As a result, actual delivery of the purchased assets failed to occur.”

The CFTC says these transactions were unlawful because they did not take place on a designated contract market. The agency adds that Kraken also offered these services without registering as a futures commission merchant (FCM).

Acting Director of Enforcement Vincent McGonagle says that the move is part of the CFTC’s efforts to protect US customers.

“Margined, leveraged, or financed digital asset trading offered to retail US customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”

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