CPO/CTA Operating Digital Asset Pool Settles CFTC Charges for Late and Inaccurate Statements

A CPO/CTA, operating a pool that invests in digital assets, settled CFTC charges for late and inaccurate statements to pool participants and NFA, and related supervisory violations.

In the Order, the CFTC found that the administrator responsible for determining the pools’ net asset values was consistently late in providing calculations and that the calculations were often inaccurate, causing the company to prepare inaccurate statements for pool participants. The CFTC stated that the administrator also filed the company’s Annual Financial Statement with NFA two months past the deadline.

The CFTC determined that the company violated (i) CFTC Rule 166.3 ("Supervision") for failure to supervise its administrator and implement an adequate supervisory system and (ii) CFTC Rule 4.7 ("Exemption from certain Part 4 requirements for CPOs") for failing to ensure that annual reports submitted to NFA and pool participants were accurate and timely.

To settle the charges, the company agreed to (i) cease and desist from further violating CFTC regulations, (ii) pay a civil monetary penalty of $150,000 and (iii) comply with certain compliance undertakings and conditions. The CFTC stated that it acknowledged the company’s “substantial cooperation,” which is reflected in the civil monetary penalty amount.

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