The U.S. Securities and Exchange Commission (SEC) have sanctioned another digital asset company. XBT Corp. SARL d/b/a First Global Credit, a Switzerland-based securities dealer, has been charged with offering and selling security based swaps, using BTC, while failing to do so on a registered national exchange.
Security based swaps, under U.S. law, are when investors are allowed to trade in securities without ever owning the underlying security asset. First Global Credit, the SEC alleges, marketed BTC based buying and selling of security based swaps. As the company never registered and met exchange requirements with the SEC, which makes the practice illegal.
“Federal securities laws impose specific requirements for offering and selling security-based swaps to retail investors in the U.S.,” said David Peavler, regional director of the SEC’s Fort Worth Regional Office. “These obligations cannot be avoided merely by describing the swap transaction by a different name or funding it with digital currencies.”
First Global Credit, the SEC notes, has already agreed to pay a penalty of $100,000 for the infraction, as well as a disgorgement, or in other words, repayment of ill-gotten gains, or $38,000.
The Commodity Futures Trading Commission (CFTC) has likewise issued charges against First Global Credit for failure to register with the Commission as a futures commission merchant (FCM). “This case demonstrates that the CFTC will hold intermediaries accountable if they solicit or accept orders without properly registering with the agency. This case also underscores that the Commission will continue working with our law enforcement and regulatory partners to ensure the integrity of our markets,” said CFTC Director of Enforcement James McDonald.
Based on a legal filing tied to the SEC’s charges, we understand First Global Credit had $62.5 million worth of security based swaps on their platform.