Poloniex, a former Circle subsidiary has <a href="https://www.sec.gov/news/press-release/2021-147" target="_blank" rel="nofollow noopener">agreed </a>to pay $10.4 million in settlement costs to the US Securities and Exchange Commission (SEC) for running an unregistered digital asset exchange.
<h2>Poloniex And The SEC Agrees A $10.4 Million Settlement</h2>
From July 2017 until November 2019, the SEC <a href="https://www.cryptoknowmics.com/news/sec-indicts-defi-lender-for-sales-of-unregistered-securities/">said</a> that the Seychelles-based crypto exchange enabled the purchase and sale of "digital assets that were investment contracts and hence securities." Poloniex did not acknowledge or reject the SEC's conclusions.

Securities are investment contracts assets that, like stock in a corporation, offer investors legitimate profit expectations. To sell them in the United States, you must obtain a license. 

Poloniex informed applicants who wanted to list their token on its exchange that it "cannot list any token that resembles a security," and requested that applicants of assets that could constitute securities submit memorandums from lawyers.

However, in August 2017, Poloniex <a href="https://www.sec.gov/news/public-statement/pierce-statement-poloniex-080921" target="_blank" rel="nofollow noopener">stated </a>that it wished to be "aggressive" in listing new assets, including those that may be considered securities, to grow market share, according to the SEC's court order.

"As a result of this, Poloniex made accessible for trading on the Poloniex Trading Platform digital assets that were investment contracts under Howey, and thus securities," the SEC stated, without specifying which assets were securities.

Circle formed an in-house legal team and hired experts to analyze tokens after acquiring Poloniex in February 2018. 

However, the SEC discovered that Poloniex continued to enable the trade of "medium risk" assets in or around July 2018.
<h2>Poloniex Fail To Register Itself As A National Securities Exchange Under Section 5 Of The Exchange Act</h2>
That same month, Poloniex delisted riskier assets with low trading volumes—those that weren't as profitable for Poloniex, which earns money when users complete transactions. FLO, FoldingCoin, BitCrystals, and Vcash were among them. All of these coins have lost their value.

Furthermore, between September and November 2018, Poloniex deleted additional "projects that are deemed securities," including Binance's BTCDOWN currency, Einsteinium, and PotCoin. 

However, the SEC determined that these delistings were insufficient, and Poloniex continued to trade securities until November 2019, when it sold its trading platform to a group of investors led by Tron founder Justin Sun.

Poloniex agreed not to conduct securities offenses and to pay the SEC $10.4 million without admitting or disputing the SEC's allegations. 

The agreement with the U.S. SEC's action came just a few months after the Securities Commission of Ontario accused Poloniex of violating securities laws.

Poloniex Agrees to Pay $10.4 Million Settlement to the SEC

Poloniex, a cryptocurrency exchange, agrees to pay the Securities and Exchange Commission (SEC) $10.4 million for marketing digital securities.

Kavya Barua is a voracious learner who is fascinated by crypto and Fintech advancements. Graduated from Janki Devi Memorial College's B.A (Hons) English program at the University of Delhi. She aspires to be a successful professional, having a keen interest in learning and achieving results.

Poloniex Agrees to Pay $10.4 Million Settlement to the SEC

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