In a landmark case, crypto prime brokerage firm Falcon Labs has settled with the US Commodity Futures Trading Commission (CFTC) over a registration violation. The Seychelles-based firm was found to be facilitating customer trading on digital asset exchanges without proper registration as a futures commission merchant (FCM).

According to the CFTC, Falcon Labs acted as an intermediary, enabling customers to trade on various digital asset exchanges, including (link unavailable) By doing so, they should have registered with the agency as an FCM. The CFTC has ordered Falcon Labs to pay over $1.7 million in fines, although the firm did not admit or deny the findings.

Notably, Falcon Labs traded futures and swaps through sub-accounts directly on digital asset exchanges. The CFTC had previously charged Binance and its former CEO Changpeng Zhao in March 2023, leading Falcon Labs to voluntarily update its know-your-customer policies and customer information collection processes.

The CFTC's Director of Enforcement, Ian McGinley, highlighted the significance of the case, stating that the agency hopes to encourage other digital asset intermediaries operating illegally to come forward and report their activities. The settlement marks the first action against an unregistered FCM facilitating access to digital asset exchanges, setting a precedent for future cases.