Deridex and Opyn are charged with failing to register as a swap execution facility (SEF) or designated contract market (DCM), failing to register as a futures commission merchant (FCM), and failing to adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs. ZeroEx, Opyn and Deridex are also charged with illegally offering leveraged and margined retail commodity transactions in digital assets. Each respondent engaged in these activities in connection with blockchain-based software protocols and smart contracts, commonly referred to as DeFi, that functioned similarly to trading platforms, and which purported to offer users the ability to engage in transactions in a decentralized environment. The orders require that Opyn, ZeroEx, and Deridex pay civil monetary penalties of $250,000, $200,000, and $100,000, respectively, and cease and desist from violating the Commodity Exchange Act (CEA) and CFTC regulations, as charged. “Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts,” said Director of Enforcement Ian McGinley. “They do not. The DeFi space may be novel, complex, and evolving, but the Division of Enforcement will continue to evolve with it and aggressively pursue those who operate unregistered platforms that allow U.S. persons to trade digital asset derivatives.” Case Background Opyn, Inc. The order finds that Opyn developed and deployed a blockchain-based digital asset protocol (the Opyn Protocol) and website that offered trading of a digital asset derivative token called oSQTH. The value of oSQTH was based on an index created by Opyn called Squeeth, which tracked the price of ether squared (i.e., to the power of two) relative to the stablecoin USDC. Users could enter into long oSQTH positions by buying oSQTH tokens through Opyn’s website, among other means; and, users could enter into short oSQTH positions by depositing ether as collateral into the Opyn Protocol and then minting and selling oSQTH tokens. The order finds that oSQTH tokens are swaps and leveraged or margined retail commodity transactions and therefore can be offered to retail users only on a registered exchange in accordance with the CEA and CFTC regulations. Opyn unlawfully operated a facility for the trading or processing of swaps without registering as a SEF. In addition, Opyn engaged in activities that could only lawfully be performed by a registered FCM by deploying the Opyn Protocol and soliciting users to deposit assets into smart contracts in connection with leveraged or margined retail commodity transactions. Opyn also failed to adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs. The order finds that although Opyn took certain steps to exclude U.S. persons from accessing the Opyn Protocol, such as blocking users with U.S. internet protocol addresses, those steps were not sufficient to actually block U.S. users from accessing the Opyn Protocol. Deridex, Inc. The order finds that Deridex developed and deployed a blockchain-based digital asset trading protocol (Deridex Protocol) and website that offered trading of “perpetual contracts,” which were leveraged derivative positions that provided for the exchange of one or more payments based on the relative value of STABL2 and another virtual currency. The order finds that these perpetual contracts are swaps and leveraged or margined retail commodity transactions and therefore can be offered to retail users only on a registered exchange in accordance with the CEA and CFTC regulations. Deridex operated as an unregistered SEF by operating a facility for the trading or processing of swaps. Deridex also engaged in activities that could only lawfully be performed by a registered FCM by deploying the Deridex Protocol and soliciting users to deposit assets into smart contracts in connection with leveraged or margined retail commodity transactions. Deridex also failed to adopt a customer identification program as part of a Bank Secrecy Act compliance program, as required of FCMs. The order finds the respondent took no steps to exclude U.S. persons from accessing the Deridex protocol. ZeroEx Inc. The order finds that ZeroEx developed and deployed a blockchain-based digital asset protocol (the 0x Protocol) and a front-end application called Matcha that offered users the ability to trade digital assets through use of various blockchains. Among the digital assets permitted to trade on Matcha were multiple tokens, developed and issued by a third party unaffiliated with ZeroEx, that provided traders approximately 2:1 leveraged exposure to digital assets such as ether and bitcoin. The order finds that these leveraged tokens are leveraged or margined retail commodity transactions and therefore can be offered only on a registered exchange in accordance with the CEA and CFTC regulations. As stated in the orders, the CFTC recognizes each respondents’ substantial cooperation with the Division of Enforcement’s investigation of this matter in the form of a reduced civil monetary penalty. The Division of Enforcement staff responsible for this matter are Jacob Mermelstein, Jack Murphy, former staff member Gates Hurand, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan.