United States regulators, namely, the Securities and Exchange Commission (SEC) and the Commodity and Futures Trading Commission (CFTC) have brought charges against Switzerland-based securities dealer, XBT Corp. SARL, otherwise known as First Global Credit.
According to separate press releases published by the regulators, First Global Credit violated registration laws concerning bitcoin denominated security-based swaps, which the company sold to investors between March 2016 to July 2017.
The SEC alleged the First Global Credit offered and sold unregistered security-based swaps to U.S investors without registering the product or selling it on a regulated national exchange. The firm also allegedly tried to convince investors to buy into their offer by using different terminologies such as “Bitcoin Asset Linked Notes,” a phrase that, of course, didn’t exist.
Regarding the renaming of the products, SEC official David Peavler reportedly said:
Federal securities laws impose specific requirements for offering and selling security-based swaps to retail investors in the U.S. These obligations cannot be avoided merely by describing the swap transaction by a different name or funding it with digital currencies.
Without accepting or denying the charges, First Global Credit agreed to settle the SEC charges by desisting from offering the product and paying $31,687 for disgorgement and a civil penalty of $100,000.
CFTC Charges Against First Global Credit
The CFTC on its part said that First Global Credit failed to register as a futures commission merchant despite offering derivative products that allowed investors to use bitcoin to margin their trades.
As punishment, First Global Credit was asked to pay a $100,000 penalty and disgorge part of the gains it made from the sales.
In a similar development in March, Stmarket.co reported that a court order another securities dealer, 1Pool Ltd, to payback an outrageous sum of $990,000 for violating registration and anti-money laundering (AML) laws.