In the Matter of Poloniex, LLC
Admin. Proc. File No. 3-20455
Oct. 14, 2022
On August 9, 2021, the Commission instituted and simultaneously settled cease-and-desist proceedings (the “Order”) against Poloniex, LLC (the “Respondent”). In the Order, the Commission found that from July 2017 through November 2019, Poloniex operated a digital asset trading platform that meets the definition of an “exchange” under the federal securities laws but did not register as a national securities exchange nor operate pursuant to an exemption from registration at any time, in violation of Section 5 of the Exchange Act. The Commission ordered the Respondent to pay $8,484,313.99 in disgorgement, $403,995.12 in prejudgment interest, and a $1,500,000.00 civil money penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty paid, along with the disgorgement and interest paid, can be distributed to harmed investors (the “Fair Fund”). See the Commission’s Order: Release No. 34-92607.
The Fair Fund includes the approximately $10,388,309 paid by the Respondent. The Fair Fund has been deposited in an interest-bearing account at the U.S. Department of the Treasury’s Bureau of the Fiscal Service, and any interest accrued will be added to the Fair Fund.
On September 21, 2021, the Commission issued an order appointing Miller Kaplan Arase LLP, as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-93083.
On November 22, 2021, the Commission issued an order appointing DST Asset Manager Solutions, Inc., as the Fund Administrator to oversee the administration and distribution of the Fair Fund and, set the administrator’s bond amount. See the Commission’s Order: Release No. 34-93634.
On June 28, 2022, the Commission issued an order removing DST Asset Manager Solutions, Inc. as the Fund Administrator and appointing KCC Class Action Services, LLC as the Fund Administrator to oversee the administration and distribution of the Fair Fund. See the Commission’s Order: Release No. 34-95172.
On December 1, 2022 the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-96429 and the Proposed Plan.
The Proposed Plan provides that the distribution of the Fair Fund shall be made to investors who paid fees to transact in certain crypto assets on the Poloniex trading platform during the Relevant Period and suffered a Recognized Loss as calculated pursuant to the methodology used in the Plan of Allocation attached to the Proposed Plan. Capitalized terms in the foregoing paragraph are used as defined in the Proposed Plan.
On January 31, 2023, the Commission issued an order approving the Proposed Plan and simultaneously posted the approved plan of distribution (the “Plan”). See the Commission’s Order: Release No. 34-96779 and the Plan.
For more information, please contact the Fund Administrator: