The Securities and Exchange Commission yesterday filed charges against an international securities dealer and its Austria-based CEO for allegedly violating the federal securities laws in connection with security-based swaps funded with bitcoins.

U.S. authorities, including the FBI, have come down against securities dealer 1Broker for allegedly coming into conflict with federal law. through a Bitcoin-based security swap scheme.  

Governmental authorities in the United States have levied allegations and charges against a Marshall Islands-registered securities dealer, 1Broker (1pool Ltd.) for allegedly breaking federal securities laws by carrying out a security swap scheme funded with Bitcoin (BTC) $6534.27 +0.3%.

According to a September 27th press release from the U.S. Securities and Exchange Commission (SEC), an cryptoundercover FBI agent was allegedly able to buy some security-based swaps on the 1Broker platform without meeting “the discretionary investment thresholds required by the federal securities laws.”

The agency also alleges the company, as well as CEO Patrick Brunner, did not follow proper registration requirements for a security-based swaps dealer. Not to mention refraining from conducting transactions on a “registered national exchange.”


The SEC noted that investors were able to open an account on the platform by giving an email address and username. They were only able to buy with Bitcoin.


In addition to the action from the SEC, the Federal Bureau of Investigations (FBI) said they seized the domain.

The agency said the domain was taken after a District Court found probable cause that “it was used, or was intended to be used” to violate laws related to money laundering, wire fraud, and improper registration.

A case filed by the Commodity Futures Trading Commission (CTFC) on September 27th asserted 1Broker was not properly registered with the CTFC. They also did not:

Implement adequate anti-money laundering and related supervisory procedures that such registration entails.

In the press release (in full below) , the SEC said they are seeking “permanent injunctions, disgorgement plus interest, and penalties.”

The case filed by the Commodity Futures Trading Commission requests a variety of relief measures, including permanent injunctions, civil monetary penalties, and restitution.



The action against 1Broker comes weeks after a District Judge affirmed that securities laws could be relevant in a fraudulent ICO case.

Judge Raymond Dearie wrote that federal securities laws ought to be interpreted in a flexible manner. The judge also reportedly mentioned that allegations against fraudsters would seem to support ICOs in the question of cryptocurrencies classified as securities.

In September, the SEC also issued a formal cease and desist order against Crypto Asset Management for coming into violation with securities laws. The regulatory agency said the firm was not registered as an investment company.

We previously reported that the hedge fund offered buybacks to investors, and reportedly agreed to pay a $200,000 fine after being contacted by the SEC.

Press Release from the SEC:

According to the SEC’s complaint, 1pool Ltd. a/k/a 1Broker, registered in the Republic of the Marshall Islands, and its CEO Patrick Brunner solicited investors from the United States and around the world to buy and sell security-based swaps.  Investors could open accounts by simply providing an email address and a user name – no additional information was required – and could only fund their account using bitcoins.  The SEC alleges that a Special Agent with the Federal Bureau of Investigation, acting in an undercover capacity, successfully purchased several security-based swaps on 1Broker’s platform from the U.S. despite not meeting the discretionary investment thresholds required by the federal securities laws.  The SEC also alleges that Brunner and 1Broker failed to transact its security-based swaps on a registered national exchange, and failed to properly register as a security-based swaps dealer.

“The SEC protects U.S. investors across a variety of platforms, regardless of the type of currency used in their transactions,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “International companies that transact with U.S. investors cannot circumvent compliance with the federal securities laws by using cryptocurrency.”

The SEC’s complaint, filed in U.S. District Court for the District of Columbia, seeks permanent injunctions, disgorgement plus interest, and penalties.  In a parallel action, the Commodity Futures Trading Commission (CFTC) announced charges against 1Broker arising from similar conduct.

The SEC’s investigation was conducted by David Hirsch and Morgan Ward Doran, and supervised by Scott Mascianica and Eric R. Werner of the SEC’s Fort Worth Regional Office.  The SEC’s litigation will be led by Chris Davis and supervised by B. David Fraser.  The Enforcement Division’s Cyber Unit assisted in the investigation.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Columbia, Department of Justice, Federal Bureau of Investigation, and the CFTC.

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