The CFTC’s notice read, “Falcon Labs is ordered to cease and desist from acting as an unregistered FCM by providing U.S. persons access to digital asset derivatives trading platforms.”
The US Commodity Futures Trading Commission (CFTC) has imposed a $1.8M penalty to settle the charges against FalconX.
As per the official notice, the CFTC targeted Falcon Labs, a subsidiary of brokerage firm FalconX, for failing to register as a futures commission merchant (FCM) with the agency. According to the CFTC, FalconX had facilitated orders for digital asset derivatives for US users between October 2021 and March 2023 through its Edge product.
Referring to Binance’s $4.3B settlement with regulators in November 2023, the agency admitted that FalconX had taken voluntary steps to improve its practices following a civil suit involving the exchange and its former CEO, Changpeng Zhao. As such, FalconX was granted a reduced penalty due to its cooperation and remediation efforts.
It is worth noting that FalconX neither admitted nor denied any of the findings or conclusions presented by the CFTC. That said, the settlement with CFTC requires FalconX to halt its services to US residents, in addition to paying $1.2M in disgorgement and $600K in civil penalties to the regulator.
