LedgerX accused the U.S. Derivatives Exchange Commission (CFTC) of deliberately delaying the consideration of its application for the launch of a derivatives clearing center (DCO), which would allow it to start trading in supplying bitcoin futures. About this writes CoinDesk with reference to two letters to the Office of the Inspector General at the US Department of Justice.
Letters verified by LedgerX were received in accordance with the law on the free distribution of information. They argue that the reason for the delay was the biased attitude of CFTC chairman Christopher Giancarlo, who demonstrated, in particular, favoritism regarding the Bakkt and ErisX platforms.
“We have good reason to believe that the unreasonable delay, which is an obvious violation of the Mercantile Exchange Act, is related to the hostility of the [CFTC] chairman to the blog post written by our CEO,” the company’s first letter dated July 3, 2019 says of the year.
LedgerX also claims that in January Christopher Giancarlo phoned a member of the company's board of directors, saying that he would personally see to it that within two weeks the application for DCO registration was canceled. Thus, says Paul Chow, CFTC chairman made it clear that he "prefers larger companies." By the latter, the CEO of LedgerX primarily means the Bakkt platform, the repeated delays in the launch of which caused Giancarlo's discontent.
LedgerX also claims that the CFTC, for completely far-fetched reasons, demanded that the company obtain an insurance certificate and undergo an audit, ostensibly wanting to make sure that its business complies with legal and technical provisions.
Jedika Chow, LedgerX COO, confirmed this information on Twitter:
“Due to the fact that the Bakkt initiative was not progressing, the chairman wanted to revoke the LedgerX license. Given no legitimate reason, the [CFTC] staff decided to contact our independent auditors to intervene in the audit results and give the commission a reason to revoke the license. The employees admitted this and apologized. ”
previous chairman wanted to revoke LX license bc Bakkt efforts not moving along. having no legitimate reason to revoke our license, staff resorted to contacting our independent auditors to tamper with audit to give commission reason to revoke license. staff admitted & apologized
– juthica (@juthica) September 28, 2019
It is alleged that the requirement to receive insurance caused problems for the CFTC employees themselves, as a result they realized that all other potential applicants, that is, Bakkt and ErisX, would have to put forward similar requirements.
“These orders were in no way consistent with the regulatory framework for making impartial decisions, and, in our opinion, were completely based on Giancarlo’s personal hostile attitude towards me because of my publication ,” said Paul Chow in a letter.
This statement is repeated by LedgerX in another letter of July 11th. It also states that the company’s application for DCO registration is considered about 250 days, while federal law provides for a period of 180 days.
Additionally, LedgerX claims to have “incurred significant costs” and was forced to part with a number of employees in the course of litigation with the CFTC. In addition, referring to an unnamed journalist from an "authoritative publication", the company claims that "government insiders" passed on the information received from it to large competitors from the private sector. It is assumed that this is ICE, the operator of the Bakkt platform.
CFTC spokesman Michael Short said that he could not comment on the allegations, but stressed that, in general, the Commission applies equally to all registered organizations. He also noted that the LedgerX business requires “comprehensive study”, and the application review deadlines were extended due to “multiple changes in the company's licensing strategy.”
In June, LedgerX announced that it had received a license from the authorized derivatives market from CFTC, which will allow it to launch the country's first delivered bitcoin futures. However, CFTC later said it had not yet given LedgerX permission to launch a new tool.
In August, the company deleted all previously published messages about the launch of deliverable bitcoin futures. As Paul Chow said then, this was done at the insistence of the CFTC. At the same time, CEO LedgerX announced its intention to sue the CFTC.
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