The Commodity Futures Trading Commission (CFTC) has issued an order filing and settling charges against Falcon Labs, Ltd., a Seychelles-based entity. The firm is accused of failing to register as a futures commission merchant (FCM), marking the CFTC's first action against an unregistered FCM that facilitated access to digital asset exchanges.
Falcon Labs has been ordered to cease and desist from acting as an unregistered FCM by providing U.S. persons access to digital asset derivatives trading platforms. The order also mandates Falcon Labs to pay $1,179,008 in disgorgement and a $589,504 civil monetary penalty. The reduced penalty reflects Falcon Labs’ substantial cooperation with the CFTC’s Division of Enforcement.
“The CFTC’s enforcement program has made clear it will not tolerate digital asset exchanges that fail to register with the CFTC or comply with the agency’s rules that maintain integrity in the derivatives markets,” said Director of Enforcement Ian McGinley. He added that this action highlights the CFTC's commitment to charge any entities—exchanges or intermediaries—who provide customers access to digital asset products and services requiring registration but have failed to do so.
The order finds that from approximately October 2021 through at least March 27, 2023, Falcon Labs solicited or accepted orders for digital asset derivatives from U.S.-based customers. During this period, Falcon Labs functioned as an intermediary facilitating customer trading on various digital asset exchanges, including institutional customers located in the U.S.
As recognized in the order, Falcon Labs voluntarily improved its controls for identifying customer locations after the CFTC filed its complaint against Changpeng Zhao, Binance Holdings Limited, Binance Holdings (IE) Limited, Binance (Services) Holdings Limited and Samuel Lim.
The CFTC urges the public to verify a company’s registration with them before committing funds. Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement.
