The U.S. regulator said Poloniex agreed to settle without admitting or denying the charges.
Launched in 2014, Poloniex was acquired in 2018 by Circle, payments and digital currency firm whose backers include Goldman Sachs.
Circle announced last month it plans to go public later this year through a merger with special-purpose acquisition company Concord Acquisition Corp in a deal that would value the crypto firm at $4.5 billion.
In Monday’s order, the SEC said from July 2017 through November 2019, Poloniex operated a Web-based global trading platform that “facilitated buying and selling digital assets, including digital assets that were investment contracts and therefore securities.” That trading platform was available to U.S. investors as well.
The SEC said Poloniex did not register as a national securities exchange with regulators despite operating its trading platform.
“Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange,” said Kristina Littman, chief of the SEC enforcement division’s cyber unit.
The order came amid a commitment from SEC Commissioner Gary Gensler to better oversee the cryptocurrency sector. At a global conference last week, Gensler urged Congress to give the agency more authority to police cryptocurrency trading, lending, and platforms, which he called a “Wild West” riddled with fraud and investor risk.
Poloniex is a wholly-owned subsidiary of Pluto Holdings – a company that is also a subsidiary of Circle Internet Financial. Back in 2019, Pluto sold the Poloniex trading platform to a third party.
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