September 23, 2023

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

LedgerX accuses United States Derivatives Exchange Commission (CFTC) of deliberately delaying review her applications for the launch of the clearing centerDerivatives (DCO), which would allow her to start trading in deliverable 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 authenticated by LedgerXconfirmed, were obtained 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 thatan unreasonable delay, which is a clear violation of the Mercantile Exchange Act, due to the hostility of the [CFTC] chairman to a blog post written by our CEO, ” - says the first letter from the head of the company Paul Chow of July 3, 2019.

LedgerX claims that in January ChristopherGiancarlo phoned a member of the company's board of directors, saying that he would personally ensure that the application for registration of DCO was canceled within two weeks. 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 states that CFTC is completelyfor far-fetched reasons, she 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:

“Because the Bakkt initiative is notmoving forward, 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. ”

It is claimed that the claim for receiptthe insurance caused problems for the CFTC staff 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 witha regulatory framework designed to make impartial decisions, and, in our opinion, were completely based on Giancarlo’s personal hostile attitude towards me because of my publication. ”- says the letter to Paul Chow.

This statement is repeated by LedgerX in anotherletter of July 11th. It says that a 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 “incurredsignificant costs ”and in the course of the proceedings with the CFTC was forced to part with a number of employees. 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. This is supposed to be about ICE, the platform operator for Bakkt.

CFTC spokesman Michael Short said nomay comment on the allegations, however, he stressed that in general the Commission applies equally to all registered organizations. He noted that the LedgerX business requires a “comprehensive study,” and the application review deadlines have been extended due to “repeated changes in the company's licensing strategy.”

In June, LedgerX announced a licenseCFTC authorized derivatives market, which will enable it to launch the country's first deliverable bitcoin futures. However, CFTC later said it had not yet given LedgerX permission to launch a new tool.

In August, the company deleted all publishedearlier reports on 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.