A crypto exchange just agreed to pay $10 million to settle an SEC probe claiming it failed to register

• The Securities and Exchange Commission announced a $10 million settlement with crypto exchange Poloniex on Monday.
• Some of the digital assets qualified as "investment contracts" regulated under securities law, the agency said.

The Securities and Exchange Commission announced a $10 million settlement with crypto exchange Poloniex on Monday as the agency ramps up its crypto enforcement efforts.

The SEC alleged that Poloniex, a mid-sized exchange founded in 2014, had failed to register as a securities exchange with federal regulators. The agency also said that, from 2017 to 2019, Poloniex allowed trading in digital assets that were unregistered securities.

Thus, Poloniex fell under the legal classification of a securities exchange and broke the law by failing to register, the SEC said in a legal order. Poloniex did not admit or deny wrongdoing but agreed to the settlement.

"Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange," said Kristina Littman, chief of the SEC's cyber enforcement division, in a statement.

Commissioner Hester Peirce, who has often publicly criticized SEC rulings, argued that the agency had held Poloniex to an unworkable standard.

"Sure, Poloniex could have tried to register as a securities exchange or, more likely, as a broker-dealer," Peirce wrote in a sharply worded dissent. "Had it done so, it likely would have waited . . . and waited . . . and waited some more."

The SEC has in recent weeks accelerated its efforts to police the crypto space, with Chairman Gary Gensler comparing crypto in its current state to the "Wild West." Last week, the agency unveiled its first-ever decentralized finance enforcement action, against a so-called DeFi money market fund.

"If a trading platform for crypto securities is a securities exchange, then lots of crypto trading platforms are going to get in trouble," Bloomberg commentator Matt Levine wrote in a column on Monday.