HK SFC Warns Public About Unlicensed Virtual Asset Trading Platform “iSCAT Exchange”
On 10 January 2025, the Hong Kong Securities and Futures Commission (HK SFC) issued a public warning against “iSCAT Exchange,” an unlicensed virtual asset trading platform operating unlawfully under Hong Kong regulations.
- The platform, known as International Standard Carbon Assets Technology Co., Limited or “iSCAT,” provides cryptocurrency trading services without an HK SFC licence.
- “iSCAT” promotes its services via social media, directing investors to its website and mobile app.
- Operating such services without a licence violates the Securities and Futures Ordinance (HK SFO) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
- The HK SFC added “iSCAT” to its Suspicious Virtual Asset Trading Platforms Alert List on 10 January 2025.
- The public is warned about risks associated with unregulated platforms, including operational failures, cyberattacks, and asset misappropriation, potentially resulting in total losses.
- Investors are advised to verify the licensing status of any virtual asset trading platform through the HK SFC’s official list.
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UK FCA Fines Arian Financial LLP £288,962.53 for Failures Linked to Cum-Ex Trading
On 10 January 2025, the UK Financial Conduct Authority (UK FCA) fined Arian Financial LLP £288,962.53 for failures in its financial crime controls related to cum-ex trading and withholding tax reclaims.
- Between January and September 2015, Arian facilitated over £52 billion in over-the-counter equity trades involving Danish and Belgian equities for clients linked to the Solo Group.
- These trades, described as circular and suspicious, were used to arrange withholding tax reclaims totalling £899.27 million in Denmark and £188 million in Belgium, with £845.9 million and £42.33 million disbursed, respectively.
- Arian earned £546,949 in commissions but failed to implement adequate systems to detect or prevent financial crime, breaching UK FCA Principles 2 and 3 requiring skill, care, diligence, and effective risk management.
- Arian admitted liability but contested the FCA’s initial fine of £744,745. The Upper Tribunal reduced the fine to £288,962.53, accounting for net financial benefits after deductions for fees paid to Solo Group entities and brokers.
- This case is the FCA’s seventh enforcement action related to cum-ex trading, contributing to over £22 million in fines imposed for similar misconduct.
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Gemini Trust Fined $5 Million for Misleading the US CFTC on Bitcoin Futures Product
On 13 January 2025, the US Commodity Futures Trading Commission (US CFTC) announced that Gemini Trust Company LLC has been ordered to pay a $5 million civil monetary penalty for providing materially false or misleading statements during the self-certification process for a bitcoin futures product.
- Gemini’s misconduct occurred between July and December 2017 and involved misrepresentations about the bitcoin futures contract settled on the Gemini platform.
- False claims included inaccuracies about prefunding requirements, trade volumes, liquidity, and fee rebates, which were critical to the US CFTC’s assessment of market manipulation risks.
- The penalty was issued through a consent order from the US District Court for the Southern District of New York on 6 January 2025.
- Gemini is permanently prohibited from making misleading statements to the US CFTC in the future.
- The US CFTC established the importance of accurate information to maintain market integrity and regulatory oversight, particularly for digital asset derivatives.
- The case began with a US CFTC complaint filed on 2 July 2022 and concluded after over two years and six months of legal proceedings.
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Mosaic Exchange Ltd. and CEO Ordered by US CFTC to Pay Over $1.1 Million for Cryptocurrency Fraud Scheme
On 13 January 2025, the US Commodity Futures Trading Commission (US CFTC) announced a court order requiring Mosaic Exchange Ltd. and its CEO, Sean Michael, to pay over $1.1 million in penalties and restitution for cryptocurrency fraud conducted between February 2019 and June 2021.
- The US CFTC’s complaint, filed on 26 September 2023, alleged fraudulent solicitation, misrepresentation of trading success, and misappropriation of customer funds by Mosaic and Michael.
- The court entered Final Default Judgment on 23 December 2024 followed by an additional order dated 30 December 2024, after the defendants failed to respond to legal proceedings.
- The penalties include, $468,600 in restitution to affected customers, $60,980 in disgorgement of ill-gotten gains and $660,000 civil monetary penalty.
- Mosaic and Michael are permanently barred from registering with the US CFTC, trading in regulated markets, and engaging in any commodity-related activities.
- The defendants falsely claimed tens of millions in assets under management and advertised fake partnerships with exchanges like Binance and BitMEX, while actually managing less than $700,000 and incurring trading losses.
- Customer funds were used by Sean Michael for personal expenses, including travel and dining, with no funds returned to investors.
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US SEC Fines Robinhood Broker-Dealers $45 Million for Regulatory Violations
On 13 January 2025, the US SEC published order instituting administrative and cease-and-desist proceedings, pursuant to sections 15(b) and 21c of the United States Securities Exchange Act of 1934, making findings, and imposing remedial sanctions and a cease-and-desist order civil penalties totalling US$45 million against Robinhood Securities LLC and Robinhood Financial LLC for multiple violations of federal securities laws.
- Robinhood Securities was fined $33.5 million, while Robinhood Financial was penalised $11.5 million.
- Violations included delays in filing suspicious activity reports, inadequate identity theft prevention, and cybersecurity deficiencies.
- A cybersecurity breach in November 2021 exposed sensitive customer information, impacting millions.
- Robinhood Securities misreported 392 million transactions over five years through incomplete electronic blue sheets and violated Regulation SHO, mislabelling millions of short sales.
- Failures in data retention and compliance systems led to missing customer communications and notifications.
- The penalties followed an extensive investigation by US SEC offices in New York and San Francisco, with assistance from FINRA.
- Robinhood admitted to certain violations and agreed to conduct internal audits and certify remediation of its deficiencies.
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Swiss FINMA Published Guidance on Reporting for Collective Investment Schemes
On 13 January 2025, the Swiss Financial Market Supervisory Authority (FINMA) issued updated guidance on reporting requirements for collective investment schemes (CIS), aiming to enhance systemic risk oversight and improve fund management supervision.
- The rules apply to Swiss funds and foreign funds managed by Swiss entities with net assets exceeding CHF 500 million, focusing on high-risk strategies like hedge funds, private equity, and commodity funds.
- Smaller funds below the CHF 500 million threshold are exempt from the reporting requirements.
- Reporting applies to banks, securities firms, insurance companies, and fund management companies under the Swiss Financial Institutions Act (FinIA), Swiss Banking Act (BA), and Swiss Insurance Supervision Act (ISA).
- The revised obligations as per the guidance requires relevant authorities to report the following:
- Annual data reports on exposures, liquidity, leverage, and counterparty risks.
- Reporting for Swiss-domiciled and foreign funds exceeding the CHF 500 million threshold.
- Data submission by 31 March each year, based on a 31 December cut-off date.
- Reporting must follow FINMA’s technical requirements, using provided Excel templates or XML Schema, and include key fund details such as net assets, leverage metrics, and liquidity risks.
- FINMA may exempt funds posing minimal leverage or financial stability risks to streamline oversight.
- The first reporting cycle starts on 1 January 2025, with submissions due by 31 March 2026.
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US CFTC Announces Departure of Clearing and Risk Director Clark Hutchison
On 13 January 2025, the US Commodity Futures Trading Commission (US CFTC) announced that Clark Hutchison, Director of the Division of Clearing and Risk, will step down from his role on 15 January 2025 after nearly six years of service.
- Clark Hutchison joined the US CFTC in July 2019, overseeing the supervision of derivatives clearinghouses and their members.
- He brought extensive market expertise from senior roles in global financial institutions, including positions with the Futures Industry Association, Chicago Mercantile Exchange Risk Committee, and NASDAQ Futures, Inc.
- His tenure spanned through market growth, historic volatility during covid-19, and changes in market structure, during which he ensured satisfactory risk assessment and surveillance.
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ASIC Seeks Feedback on Extending Relief for Business Introduction Services
On 13 January 2025, the Australian Securities and Investments Commission (ASIC) opened a consultation on the future of the ASIC Corporations (Business Introduction Services) Instrument 2022/805, which is set to expire on 1 April 2025.
- ASIC is seeking input on extending relief for managed investment schemes and reinstating relief for securities other than debentures.
- Feedback must address the necessity of reinstating relief, especially where the crowd-sourced funding (CSF) regime under the Corporations Act 2001 is inadequate for small- to medium-scale capital raisings.
- The Instrument provides conditional regulatory relief from fundraising, financial product disclosure, hawking, and advertising requirements for business introduction services.
- Service providers must still hold an Australian financial services (AFS) licence if they provide financial services.
- ASIC reports minimal use of the Instrument for managed investment schemes since its introduction in October 2022.
- Business introduction services have benefited from relief provisions since 2002, initially granted under ASIC Class Order [CO 02/273].
- In 2022, ASIC excluded relief for securities, citing the flexibility and affordability of the CSF regime, which includes investor protections and supports unlisted companies.
- ASIC is evaluating whether reinstating relief for securities is justified, based on evidence of benefits and gaps in the CSF regime.
- The consultation period ends at 5 pm AEDT on 5 February 2025, after which ASIC will review responses and decide on the regulatory relief’s extension or adjustment.
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US CFTC and Bank of England Collaborate on Report Enhancing Margin Practices in Cleared Markets
On 15 January 2025, the US Commodity Futures Trading Commission (US CFTC) and the Bank of England announced the release of the Final Report on Transparency and responsiveness of initial margin in centrally cleared markets – review and policy proposals, co-chaired by the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), and IOSCO.
- The report builds on findings from the September 2022 Review of Margining Practices, addressing six critical areas for policy improvement identified during the March 2020 market turmoil.
- It contains 10 policy proposals aimed at enhancing margin transparency, improving responsiveness, and strengthening the financial resilience of cleared markets.
- Key areas of focus included initial margin practices during periods of market volatility in March-April 2020 and the commodity market disruptions in 2022.
- The recommendations were shaped by extensive industry consultations and public feedback in 2024, ensuring practical and balanced policy solutions.
- Related publications from CPMI, IOSCO, and BCBS address variation margin processes and margin models in non-centrally cleared markets, reflecting a coordinated global effort.
- The final report reflects 854 days of analysis, consultation, and policy development.
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US SEC Chief Economist Jessica A. Wachter to Depart, Returning to Academia
On 15 January 2025, the US Securities and Exchange Commission (US SEC) announced the departure of Jessica A. Wachter, Chief Economist and Director of the Division of Economic and Risk Analysis (DERA). Wachter, who has led DERA since mid-2021, will leave on 17 January 2025 to resume her academic career at the Wharton School of the University of Pennsylvania.
- Jessica A.Wachter’s tenure spanned approximately three and a half years, during which she oversaw over 100 economic analyses supporting key rulemaking initiatives.
- Her major contributions include, the implementation of central clearing in the Treasury market, shortening settlement cycles, enhancing money market fund resilience, and increasing transparency on cyber risks.
- She advanced data accessibility and its application in enforcement cases, such as calculating ill-gotten gains and returning funds to investors.
- Before joining the SEC, Jessica A.Wachter was a professor at Wharton and previously taught at NYU’s Stern School of Business, specialising in quantitative finance.
- She will return to Wharton as the Dr. Bruce I. Jacobs Chair of Quantitative Finance.
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ASIC Appoints Scott Gregson as CEO During Organisational Transformation
On 16 January 2025, the Australian Securities and Investments Commission (ASIC) announced Scott Gregson as its new Chief Executive Officer, effective 17 March 2025. Gregson brings nearly 30 years of regulatory and enforcement experience from the Australian Competition and Consumer Commission (ACCC).
- Scott Gregson will succeed retiring interim CEO Greg Yanco, who was praised for his contributions to ASIC and Australia’s financial services landscape.
- ASIC Chair Joe Longo commended Gregson’s leadership and extensive regulatory experience, highlighting his commitment to achieving beneficial outcomes for Australians.
- Gregson’s appointment comes during ASIC’s ongoing organisational transformation, the largest structural redesign in 15 years, which has added leadership roles in enforcement, compliance, data, and technology.
- At the ACCC, Scott Gregson held senior roles in mergers, enforcement, and investigations, leading major litigation against companies like Volkswagen, Coles, and Apple.
- He also spearheaded the ACCC’s digital and data transformation initiatives, enhancing its regulatory capabilities.
- Scott Gregson holds a Bachelor of Commerce, majoring in Economics and Business Law, from Curtin University.
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