UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

ZeroEx, Inc. 

Respondent. 

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CFTC Docket No. 23-41

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTION 6(c) AND (d) OF THE COMMODITY EXCHANGE ACT, MAKING 

FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I. INTRODUCTION

The Commodity Futures Trading Commission (“Commission”) has reason to believe 

that, from at least approximately March 2021 to approximately February 2023 (the “Relevant 

Period”), ZeroEx, Inc. (“0x” or “Respondent”) violated Section 4(a), of the Commodity 

Exchange Act (“Act”), 7 U.S.C. § 6(a) (2022). Therefore, the Commission deems it appropriate 

and in the public interest that public administrative proceedings be, and hereby are, instituted to 

determine whether Respondent engaged in the violations set forth herein and to determine 

whether any order should be issued imposing remedial sanctions. 

In anticipation of the institution of an administrative proceeding, Respondent has 

submitted an Offer of Settlement (“Offer”), which the Commission has determined to accept. 

Without admitting or denying any of the findings or conclusions herein, Respondent consents to 

the entry of this Order Instituting Proceedings Pursuant to Section 6(c) and (d) of the Commodity 

Exchange Act, Making Findings, and Imposing Remedial Sanctions (“Order”), and 

acknowledges service of this Order.1

1

 Respondent consents to the use of the findings of fact and conclusions of law in this Order in this proceeding and 

in any other proceeding brought by the Commission or to which the Commission is a party or claimant, and agrees 

that they shall be taken as true and correct and be given preclusive effect therein, without further proof. Respondent 

does not consent, however, to the use of this Order, or the findings or conclusions herein, as the sole basis for any 

other proceeding brought by the Commission or to which the Commission is a party or claimant, other than: a 

proceeding in bankruptcy or receivership; or a proceeding to enforce the terms of this Order. Respondent does not 

consent to the use of the Offer or this Order, or the findings or conclusions in this Order, by any other party in any 

other proceeding.
2 

II. FINDINGS 

The Commission finds the following: 

A. SUMMARY 

 0x developed and deployed a blockchain-based digital asset protocol (the “0x Protocol”) 

that offered retail and institutional users in the United States and abroad the ability to trade 

digital assets through use of various blockchains. 0x users trade on a peer-to-peer basis, 

meaning, according to 0x, that users “trade directly from [their] Ethereum wallet and retain 

complete custody of [their] tokens throughout the entire process.” 0x additionally created and 

operated a front-end user interface called “Matcha,” which utilized the 0x Protocol to enable 

users to exchange digital assets. Matcha was marketed to retail investors as a decentralized 

exchange (“DEX”) as well as a DEX aggregator that compiled price data from multiple other 

DEXs and market makers. By accessing Matcha’s website, users could submit bids and offers, 

and execute trades on a peer-to-peer basis in various digital assets from multiple sources of 

liquidity, including market makers and unaffiliated third party DEXs supplying liquidity directly 

through the Matcha interface.2 Such digital assets included certain leveraged tokens, which 

provided traders approximately 2:1 leveraged exposure to digital assets such as ether (ETH) and 

bitcoin (BTC), both commodities in interstate commerce. 

 

 In doing so, Respondent violated Section 4(a) of the Act, 7 U.S.C. § 6(a), by conducting 

an office or business in the United States for the purpose of soliciting or accepting orders for, or 

otherwise dealing in, off-exchange leveraged or margined retail commodity transactions with 

customers who were not eligible contract participants or eligible commercial entities3

(collectively, “ECPs”). 

 In accepting the Offer, the Commission recognizes Respondent’s substantial cooperation 

with the Commission’s Division of Enforcement. The Commission also acknowledges 

Respondent’s representations concerning its remediation in connection with this matter. The 

Commission’s recognition of Respondent’s substantial cooperation and remediation is reflected 

in the form of a reduced civil monetary penalty. 

B. RESPONDENT 

ZeroEx, Inc. is a Delaware corporation, with its principal place of business in San 

Francisco. 0x has never been registered with the Commission in any capacity. 

 

2

 In addition, during a portion of the Relevant Period, Matcha sourced liquidity for certain digital assets from a 

market maker wholly-owned by 0x. This wholly-owned market maker did not trade the leveraged tokens at issue in 

this Order and ceased operations in August 2022. 

3

 Eligible commercial entities and eligible contract participants and are defined in Sections 1a(17) and (18) of the 

Act, 7 U.S.C. §§ 1a(17), (18), respectively. 
3 

C. FACTS 

During the Relevant Period, the 0x Protocol was a collection of smart contracts on the 

Ethereum blockchain that functioned as a blockchain-based digital asset trading platform.4 

Respondent developed and deployed the 0x Protocol. Respondent additionally created and 

operated Matcha, a front-end user interface that was integrated with the 0x Protocol. 

By accessing Matcha’s website, users could trade on a peer-to-peer basis in thousands of 

different digital assets trading pairs for settlement on various blockchains.5 Among the digital 

assets that were traded on Matcha were certain leveraged digital assets (“Leveraged Tokens”) 

developed and issued by a third party unaffiliated with 0x (“Issuer 1”), including: BTC 2x 

Flexible Leverage Index token (BTC2XFLI); ETH 2x Flexible Leverage Index token 

(ETH2XFLI); ETH 2x Flexible Leverage Index token-Polygon (ETH2XFLI-P); and BTC 2x 

Flexible Leverage Index token-Polygon (BTC2xFLI-P). By purchasing the Leveraged Tokens 

through Matcha, users could obtain a fungible token that provided leveraged exposure of 

approximately 2:1 on, respectively, the price of bitcoin and ether.6 For example, buying 

ETH2XFLI would allow a purchaser to gain approximately a 20% return if the price of ETH 

(relative to USDC, a stablecoin) rose by 10%. Purchases and sales of the Leveraged Tokens 

contained no restrictions that would result in, and generally did not result in, actual delivery of 

the underlying commodities (i.e., bitcoin and ether) within 28 days. Respondent took no steps to 

restrict access to users who were not eligible contract participants (“ECPs”). 

0x did not charge trading fees on transactions in Leveraged Tokens. During the Relevant 

Period, Matcha users transacted a notional value of approximately $117 million in trades 

involving Leveraged Tokens. 

 

4

 A blockchain is a distributed, shared, immutable ledger that facilitates the process of recording transactions 

and tracking digital assets in a consensus-based network. A smart contract is a piece of computer code that is 

deployed on a blockchain to automatically execute pre-programmed actions when predetermined conditions are met, 

and is often intended to contain all terms of a contract—meaning the software can execute the agreement contained 

in the contract without additional input from the parties. A digital asset is anything that can be stored and 

transmitted electronically and has associated ownership or use rights. Digital assets include virtual currencies, 

which are digital representations of value that function as mediums of exchange, units of account, and/or stores of 

value. Ether (“ETH”) is the Ethereum blockchain’s native virtual currency. In addition, Ethereum’s ERC-20 

technical standard allows any individual to develop new digital asset tokens that can be traded on the Ethereum 

blockchain. 

5

 “Trading pairs” are digital assets that can be traded for each other. For example, a user transacting in the trading 

pair ETH/USDT can exchange ETH for USDT (Tether, a stablecoin), or vice versa. 

 

6

 To generate the approximately 2:1 leverage for the Leveraged Tokens, Issuer 1 deployed smart contracts that were 

designed to automatically borrow stablecoins from third-party blockchain-based lending platforms and then utilize 

those borrowed stablecoins to engage in automated trading on other third-party decentralized exchanges. The 

Leveraged Tokens each targeted a leverage ratio of 2x (i.e. 200%) leverage. However, the actual leverage ratio was 

designed to fluctuate from 1.8x to 2.2x (180% to 220%) for BTC2XFLI and BTC2XFLI-P, and designed to fluctuate 

between 1.7x to 2.3x (170% to 230%) for ETH2XFLI and ETH2XFLI-P. 

 
4 

After the Division began an inquiry into 0x, Respondent promptly took remedial action 

and provided substantial cooperation with the Division of Enforcement’s investigation, which 

materially assisted the investigation. In particular, 0x took immediate steps to prevent Leveraged 

Tokens from being traded through Matcha. 

III. LEGAL DISCUSSION 

A. 0x Engaged in Unlawful, Off-Exchange Leveraged or Margined Retail Commodity 

Transactions in Violation of Section 4(a) of the Act 

Pursuant to Section 2(c)(2)(D)(iii) of the Act, 7 U.S.C. § 2(c)(2)(D)(iii), any agreement, 

contract, or transaction in any commodity that is entered into with or offered to (even if not 

entered into with) non-ECPs on a leveraged or margined basis, or financed by the offeror, 

counterparty, or a person acting in concert with the offeror or counterparty is, with certain 

exceptions, subject to Section 4(a) of the Act, 7 U.S.C. § 6(a), “as if the agreement, contract, or 

transaction was a contract of sale of a commodity for future delivery.”7

 

Section 4(a) of the Act makes it unlawful for any person to offer to enter into, enter into, 

execute, confirm the execution of, or conduct an office or business in the United States for the 

purpose of soliciting, or accepting any order for, or otherwise dealing in any transaction in, or in 

connection with, a commodity futures contract, unless such transaction is made on or subject to 

the rules of a board of trade that has been designated or registered by the CFTC as a contract 

market for the specific commodity. 

The Leveraged Tokens were offered to non-ECPs on a leveraged basis by Issuer 1, and 

subsequently could be traded using Matcha.8

 During the Relevant Period, utilizing Matcha and 

the 0x Protocol, Respondent conducted an office or business in the United States for the purpose 

of soliciting or accepting orders for, or otherwise dealing in, off-exchange leveraged or margined 

retail commodity transactions, in the form of transactions in Leveraged Tokens providing 

leveraged exposure to bitcoin and ether by non-ECP persons, which did not result in actual 

delivery within 28 days. These leveraged or margined retail commodity transactions were not 

conducted on or subject to the rules of a board of trade that has been designated or registered by 

the CFTC as a contract market and therefore 0x violated Section 4(a) of the Act. 

 

7

 Section 2(c)(2)(D)(ii)(III)(aa) of the Act, 7 U.S.C. § 2(c)(2)(D)(ii)(III)(aa), provides an exception for contracts of 

sale that result in actual delivery within 28 days. That exception is inapplicable to transactions involving Leveraged 

Tokens on Matcha, because (i) the Leveraged Token positions were not physically settled contracts of sale that 

required delivery of the underlying commodities within 28 days, but rather the positions could exist perpetually; and 

(ii) the positions were subject to the potential of forced liquidation. See Retail Commodity Transactions Involving 

Certain Digital Assets (“2020 Interpretive Guidance”), 85 Fed. Reg. 37,734-01 at 37,743-37,744 (June 24, 2020). 

8

 As the Commission has explained, the term “offeror” in the context of Section 2(c)(2)(D) includes persons or 

entities that present, solicit, or facilitate the use of margin, leverage, or financing arrangements. See 2020 

Interpretive Guidance, 85 Fed. Reg. at 37,737 n.63, 37,736 n.164. Section 2(c)(2)(D) encompasses, inter alia, any 

such retail transaction entered into or financed by the offeror or a person acting in concert with the offeror. Id. By 

deploying a decentralized protocol (the 0x Protocol) and operating a front-end user interface (Matcha) that 

“facilitated” and “provide[d] a purchaser with the ability to source financing or leverage from other users or third 

parties,” Respondent’s conduct met this standard. Id. at 37,742 n.152 & 37,743 n.165. 
5 

IV. FINDINGS OF VIOLATIONS 

Based on the foregoing, the Commission finds that, during the Relevant Period, 

Respondent violated Section 4(a) of the Act, 7 U.S.C. § 6(a). 

V. OFFER OF SETTLEMENT 

Respondent has submitted the Offer in which it, without admitting or denying the 

findings and conclusions herein: 

A. Acknowledges service of this Order; 

B. Admits the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on violation of or enforcement of this Order; 

C. Waives: 

1. The filing and service of a complaint and notice of hearing; 

2. A hearing; 

3. All post-hearing procedures; 

4. Judicial review by any court; 

5. Any and all objections to the participation by any member of the Commission’s 

staff in the Commission’s consideration of the Offer; 

6. Any and all claims that it may possess under the Equal Access to Justice Act, 

5 U.S.C. § 504, and 28 U.S.C. § 2412, and/or the rules promulgated by the 

Commission in conformity therewith, Part 148 of the Regulations, 17 C.F.R. 

pt. 148 (2022), relating to, or arising from, this proceeding; 

7. Any and all claims that it may possess under the Small Business Regulatory 

Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II, §§ 201–253, 110 

Stat. 847, 857–74 (codified as amended at 28 U.S.C. § 2412 and in scattered 

sections of 5 U.S.C. and 15 U.S.C.), relating to, or arising from, this proceeding; 

and 

8. Any claims of Double Jeopardy based on the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief, including this Order; 

D. Acknowledges that the Commission is the prevailing party in this action for purposes of 

the waiver of any and all rights under the Equal Access to Justice Act and the Small 
6 

Business Regulatory Enforcement Fairness Act of 1996, specified in subparts 6 and 7 of 

Paragraph C of this Section; 

E. Stipulates that the record basis on which this Order is entered shall consist solely of the 

findings contained in this Order to which Respondent has consented in the Offer; 

F. Consents, solely on the basis of the Offer, to the Commission’s entry of this Order that: 

1. Makes findings by the Commission that Respondent violated Section 4(a) of the 

Act, 7 U.S.C. § 6(a) (2022); 

2. Orders Respondent to cease and desist from violating Section 4(a) of the Act, 7 

U.S.C. § 6(a) (2022); 

3. Orders Respondent to pay a civil monetary penalty in the amount of two hundred 

thousand US dollars ($200,000), plus post-judgment interest in the event such civil 

monetary penalty is not paid within ten days of the date of entry of this Order; and 

G. Orders Respondent and its successors and assigns to comply with the conditions and 

undertakings consented to in the Offer and as set forth in Part VI of this Order. 

Upon consideration, the Commission has determined to accept the Offer. 

VI. ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

A. ZeroEx, Inc., and its successors and assigns shall cease and desist from violating Section 

4(a) of the Act, 7 U.S.C. § 6(a) (2022). 

B. Respondent shall pay a civil monetary penalty in the amount of two hundred thousand US 

dollars ($200,000) (“CMP Obligation”), within ten days of the date of the entry of this 

Order. If the CMP Obligation is not paid in full within ten days of the date of entry of 

this Order, then post-judgment interest shall accrue on the unpaid portion of the CMP 

Obligation beginning on the date of entry of this Order and shall be determined by using 

the Treasury Bill rate prevailing on the date of entry of this Order pursuant to 28 U.S.C. 

§ 1961. 

Respondent shall pay the CMP Obligation and any post-judgment interest by electronic 

funds transfer, U.S. postal money order, certified check, bank cashier’s check, or bank 

money order. If payment is to be made other than by electronic funds transfer, then the 

payment shall be made payable to the Commodity Futures Trading Commission and sent 

to the address below:

MMAC/ESC/AMK326 

Commodity Futures Trading Commission 

Division of Enforcement 

6500 S. MacArthur Blvd. 
7 

HQ Room 266 

Oklahoma City, OK 73169 

9-AMC-AR-CFTC@faa.gov 

 If payment is to be made by electronic funds transfer, Respondent shall contact Tonia 

King or her successor at the above email address to receive payment instructions and 

shall fully comply with those instructions. Respondent shall accompany payment of the 

CMP Obligation with a cover letter that identifies the paying Respondent and the name 

and docket number of this proceeding. The paying Respondent shall simultaneously 

transmit copies of the cover letter and the form of payment to the Chief Financial Officer, 

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581; 

C. Respondent and its successors and assigns shall comply with the following conditions 

and undertakings set forth in the Offer: 

1. Public Statements: Respondent agrees that neither it nor any of ZeroEx, Inc.’s 

successors and assigns, agents or employees under their authority or control shall take 

any action or make any public statement denying, directly or indirectly, any findings 

or conclusions in this Order or creating, or tending to create, the impression that this 

Order is without a factual basis; provided, however, that nothing in this provision 

shall affect Respondent’s: (i) testimonial obligations; or (ii) right to take legal 

positions in other proceedings to which the Commission is not a party. Respondent 

and any of its successors and assigns shall comply with this agreement and shall 

undertake all steps necessary to ensure that all of their agents and/or employees under 

their authority or control understand and comply with this agreement. 

2. Partial Satisfaction: Respondent understands and agrees that any acceptance by the 

Commission of any partial payment of Respondent’s CMP Obligation shall not be 

deemed a waiver of its obligation to make further payments pursuant to this Order, or 

a waiver of the Commission’s right to seek to compel payment of any remaining 

balance. 

3. Change of Address/Phone: Until such time as Respondent satisfies in full its CMP 

Obligation as set forth in this Order, Respondent shall provide written notice to the 

Commission by certified mail of any change to its telephone numbers and mailing 

addresses within ten calendar days of the change. 

4. Until such time as Respondent satisfies in full its CMP Obligation, upon the 

commencement by or against Respondent of insolvency, receivership or bankruptcy 

proceedings, or any other proceedings for the settlement of Respondent’s debts, all 

notices to creditors required to be furnished to the Commission under Title 11 of the 

United States Code or other applicable law with respect to such insolvency, 

receivership, bankruptcy, or other proceedings, shall be sent to the address below: