The United States Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) issued simultaneous press releases in which they charged XBT Corp., also known as First Global Credit (FGC), with selling security-based swaps for bitcoin without registering as a futures commission merchant (FCM) on a national exchange.
According to the legal filings, between March 2016 and July 2017, XBT had at least 90 investors who conducted trades in security-based swaps, of whom 24 were U.S. residents, and accepted payments in bitcoin. At that time, the company had no FCM registration and also failed to properly register as a security-based swaps dealer.
XBT launched its First Credit in October 2014. The company offered "contract for difference" (CFD) derivative products, which enabled customers to purchase credits representing shares in famous companies in exchange for bitcoin deposits.
Overall, between 2014 and 2019, FGC's investors collectively carried out over 18,000 security-based swaps. Over this time period they bought and sold $62.5 million worth of security-based swaps "based on U.S.-listed securities," of which $34 million worth of transactions were conducted by traders residing in the U.S.
The SEC accepted XBT's request for settlement and, as part of that settlement, ordered it to pay more than $130,000 in civil penalties, fees, and disgorgement, with the funds passing into the SEC's custody in the course of the next year. The CFTC also mandated that the company pay a civil monetary penalty in the amount of another $100,000 and disgorge the gains it received as a result of its violations; it was also ordered to cease and desist from future Commodity Exchange Act violations. The press release from the CFTC states that the regulator "recognizes that FGC’s civil monetary penalty in this matter was substantially reduced in light of FGC’s cooperation and remediation."