Digital asset broker Falcon Labs reaches a settlement with the U.S. CFTC for violating registration regulations

According to ChainCatcher, The Block reported that the Commodity Futures Trading Commission (CFTC) has issued a statement saying that Falcon Labs, Ltd., a digital asset brokerage based in Seychelles, has reached a settlement with the CFTC for failing to register as a Futures Commission Merchant (FCM) as required. This marks the CFTC's first enforcement action against such violations.

The CFTC stated that Falcon Labs is an "intermediary that facilitates trading for clients on various digital asset exchanges" and had previously engaged in futures and swap trading directly on exchanges like Binance through sub-accounts, thus should have registered as an FCM. Falcon Labs neither admitted nor denied the findings of the CFTC's investigation and has been ordered to pay a fine of over $1.7 million. Following the CFTC's charges against Binance and its former CEO Changpeng Zhao in March 2023, Falcon Labs proactively modified its client information collection methods and updated its Know Your Customer (KYC) policies.

CFTC enforcement director Ian McGinley stated that, considering Falcon Labs' strong cooperation and corrective measures, the CFTC settled for a lower fine amount, hoping to encourage other illegally operating digital asset intermediaries to voluntarily report their activities to the CFTC.