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LedgerX accuses Commodity Derivatives Commission of deliberate delay in launching bitcoin futures

The company LedgerX accused the Commission on urgent exchange trade of the USA (CFTC) in the deliberate delay of consideration of its application for the launch of the clearing centre in the derivatives (DCO), which would allow it to start trading deliverable bitcoin futures. This writes CoinDesk, citing two letters addressed to the office of the inspector General at the U.S. Department of justice.

The letter, whose authenticity was confirmed in LedgerX, was obtained in accordance with the law on the free dissemination of information. They argued that the reason for the delay was the biased attitude of the Chairman of the CFTC Christopher Giancarlo, who demonstrated, in particular, the favouritism for platforms Bakkt and ErisX.

"We have sufficient reason to believe that undue delay, which is a clear violation of the Law on commodity exchanges, connected with the hostile attitude of the Chairman of the [CFTC] to be published in the blog written by our CEO," reads the letter head of the company Paul Chou of 3 July 2019.

LedgerX also claims that in January Christopher Giancarlo phoned one of the members of the Board of Directors of the company, saying that he would personally see to it that within two weeks the application for DCO registration was cancelled. Thus, says Paul Chow, Chairman of the CFTC has made clear that "the preference for larger companies." Under the last CEO LedgerX in the first place understands the platform Bakkt, repeated delays in the launch which caused discontent Giancarlo.

LedgerX also States that the CFTC for quite frivolous reasons required the company to obtain insurance certificate and to undergo an audit, allegedly wanting to ensure that her business complies with the provisions of legal and technical nature.

Operating officer of LedgerX Jutika Chou confirmed this information, wrote on Twitter:

"Due to the fact that the initiative Bakkt did not come on, the President wanted to revoke the license of LedgerX. Without legitimate reasons, the staff of the [CFTC] decide to contact our independent auditors to intervene in the results of the audit and give the Commission cause for the revocation of the license. The staff admitted it and apologized."

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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