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Ikigai partners fined $150K by US regulator over illicit Bitcoin loan

GrafaGrafa2024/08/21 02:40
By:Mahathir Bayena

The National Futures Association (NFA) has fined cryptocurrency fund Ikigai Strategic Partners $150,000 for an allegedly illicit Bitcoin (CRYPTO:BTC) loan, according to an August 20 decision.

This penalty is part of the ongoing repercussions from the 2022 industry-wide liquidity crisis triggered by the collapse of the FTX exchange.

The NFA, which regulates the U.S. derivatives market, is increasingly policing activities in the spot cryptocurrency markets.

Ikigai Strategic was accused of allowing one of its investment pools to make an unauthorized advance of assets to an affiliate owned by fund principal Anthony Robert Emtman and another Ikigai principal.

In 2022, Ikigai allegedly loaned approximately $2.5 million worth of Bitcoin to a crypto exchange, benefiting another fund owned and operated by the same principals.

The loan put 80% of Ikigai's assets, around $65 million, on the exchange, leading to the fund's inability to meet investor redemption demands.

The NFA's complaint noted that Ikigai used the Bitcoin from its Master Fund as collateral for a $1.3 million line of credit in USDC (CRYPTO:USDC), which was extended to the affiliated Ikigai Capital Partners GP LLC.

Ikigai Strategic Partners and its principal operator agreed to the $150,000 fine without admitting or denying the allegations.

This case reflects the NFA's broader efforts to regulate and address misconduct in the digital asset markets, especially following the new rules issued in May governing the conduct of member firms in the spot cryptocurrency markets.

Prior to these rules, the NFA had "well over 100" members involved in digital asset activities but lacked the regulatory framework to address fraud and misconduct within the sector.

The fine underscores the increasing scrutiny and regulation facing cryptocurrency funds, especially in the wake of significant market disruptions like the FTX collapse.

At the time of reporting the Bitcoin price was $59,011.31.

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