United States (US) regulator fines crypto fund $150K for illicit Bitcoin loan
It is part of the aftermath from the industry-wide liquidity constraint caused by FTX in 2022. Cryptocurrency fund lkigai Strategic Partners agreed to pay a $150,000 fine to the National Futures Association (NFA) in the United States for an allegedly illegal Bitcoin $59,608 loan, according to an NFA hearing panel ruling on August 20.
The action is part of the ongoing consequences from the industry-wide liquidity crisis that began with the bankruptcy of cryptocurrency exchange FTX in 2022. It is also the latest instance of the NFA, which helps regulate the US futures market, police spot cryptocurrency markets.
“Ikigai Strategic permitted one of the pools the firm operates to make a prohibited advance of pool assets to an affiliate that [fund principal Anthony Robert] Emtman and another Ikigai Strategic principal own,” the National Football League said on Aug. 20.According to the April 29 complaint, lkigai reportedly loaned around $2.5 million in BTC to a cryptocurrency exchange in 2022 to benefit another fund owned and run by the same people who ran lkigai. According to the complaint, the fund owned around $65 million on the exchange, or 80% of its total assets. It did not mention the exchange.
The loan, which the NFA claims violated lkigai’s regulatory requirements, left lkigai unable to pay redemption demands from its investors, according to the lawsuit.
“Ikigai Strategic used the Master Fund’s Bitcoin as collateral for a $1.3 million [US Dollar Coin] USDC existing line of credit” issued to associated fund Ikigai Capital Partners GP LLC, the complaint said. According to the verdict, Kigali and its chief operator decided to pay a $150,000 fine rather than admitting or disputing the claims.
On May 31, the NFA released guidelines limiting the conduct of member firms operating in spot cryptocurrency markets, including strict regulations on false and deceptive claims.
Prior to the May rule issuance, the self-regulatory organisation had “well over 100” members engaged in operations involving digital asset commodities, but there was no method to address fraud or misconduct committed by those members, according to a letter from the NFA dated February 28.
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