UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

In the Matter of: 

Opyn, Inc. 

Respondent. 

) 

) 

)

) 

) 

) 

) 

) 

) 

) 

CFTC Docket No. 23-40

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 January 11, 2022 to approximately June 2023 (the “Relevant 

Period”), Opyn, Inc. (“Opyn” or “Respondent”) violated Sections 4(a), 4d(a)(1) and 5h(a)(1) of 

the Commodity Exchange Act (“Act”), 7 U.S.C. §§ 6(a), 6d(a)(1), 7b-3(a)(1), and Commission 

Regulations (“Regulations”) 37.3(a)(1) and 42.2, 17 C.F.R. §§ 37.3(a)(1), 42.2 (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, including a proceeding in which the registration of Respondent may be affected, brought by the 

Commission or to which the Commission is a party or claimant, other than: a proceeding in bankruptcy or 
2 

II. FINDINGS 

The Commission finds the following: 

A. SUMMARY 

 Respondent developed and deployed a blockchain-based digital asset trading platform 

(the “Opyn Protocol”) that offered trading of digital asset derivatives based in part on the price of 

ether to traders in the United States and abroad. By accessing the Opyn Protocol, users could 

enter into long and short derivative positions in so-called “power perpetuals,” derivative products 

whose values were based on an index created by Opyn that tracked the price of ether, a 

commodity in interstate commerce, squared (i.e., to the power of two), relative to the stablecoin 

USDC. 

 In doing so, Respondent—who has never registered with the Commission—unlawfully 

engaged in activities that could only lawfully be performed by Commission registrants and 

registered entities. Respondent violated Section 5h(a)(1) of the Act, 7 U.S.C. § 7b-3(a)(1), and 

Regulation 37.3(a)(1), 17 C.F.R. § 37.3(a)(1) (2022), by operating a facility for the trading or 

processing of swaps without being registered as a swap execution facility (“SEF”) or as a 

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

offering to enter into, entering into, executing, and/or confirming the execution of leveraged or 

margined retail commodity transactions with U.S. customers who were not eligible contract 

participants or eligible commercial entities.2

 Respondent also operated as an unregistered futures 

commission merchant (“FCM”) in violation of Section 4d(a)(1) of the Act, 7 U.S.C. § 6d(a)(1), 

by soliciting and accepting orders for swaps and leveraged or margined retail commodity 

transactions and accepting money or property to margin those transactions. In addition, 

Respondent violated Regulation 42.2, 17 C.F.R. § 42.2 (2022), by failing to conduct know-yourcustomer (“KYC”) diligence on its customers as part of a customer identification program 

(“CIP”), as required of FCMs. 

 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 remedial efforts is 

reflected in the form of a reduced civil monetary penalty. 

B. RESPONDENT 

Opyn, Inc. is a Delaware corporation with its principal place of business in California. 

Opyn has never been registered with the Commission in any capacity. 

 

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

 Eligible commercial entities and eligible contract participants (collectively, ECPs”) 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 Opyn Protocol was a collection of smart contracts on the 

Ethereum blockchain relating to the creation, purchase, sale, and trading of a blockchain-based 

derivative called oSQTH.3 oSQTH is an ERC20 token whose value was based on an index 

created by Opyn that tracked the price of ether squared—i.e., to the power of two—called 

“Squeeth” (“Squeeth Index”).4 

Respondent developed and deployed the Opyn Protocol, which it launched on the 

Ethereum blockchain in January 2022. Respondent also operated a website, https://opyn.co/, to, 

among other things, solicit orders for, and facilitate access to, the Opyn Protocol. Opyn referred 

to oSQTH tokens as “power perpetuals” that were “similar to a perpetual swap,” provided 

“options-like” exposure without strike prices or expiries, and “effectively consolidat[ed] much of 

the options market liquidity into a single ERC20 token.” 

The Opyn Protocol was accessible to users in the United States and abroad in three ways: 

through Opyn’s website; by accessing the Opyn Protocol through Decentralized Exchange 1; and 

by accessing the Opyn Protocol directly through a blockchain explorer. To enter into long or 

short positions in oSQTH, a user would access the Opyn Protocol and connect their digital asset 

wallet. To ensure that the price of oSQTH remained tethered to the price of the Squeeth Index, 

the Opyn Protocol employed an in-kind funding rate mechanism, which impacted the value of 

long and short positions, as determined by the difference between the Squeeth Index price and 

the price of oSQTH. 

Users of the Opyn Protocol could enter into a long oSQTH position by buying oSQTH 

through Opyn’s website, Decentralized Exchange 1, or a blockchain explorer. To enter into a 

short position, users minted5

 new oSQTH tokens, either through Opyn’s website or a blockchain 

explorer, and then sold those tokens through Opyn’s website, Decentralized Exchange 1, or a 

blockchain explorer. Entering into short positions required users to deposit a minimum of the 

greater of 6.9 ether or 150% of the value of the short position as collateral into the Opyn 

Protocol; these amounts were held in custody by Opyn Protocol smart contracts until the short 

position was closed. If a user’s collateralization ratio on a short position dropped below 150%, 

its position was subject to liquidation by third party liquidators. Users could add collateral to 

their short position to increase their collateralization ratio; if the collateralization ratio of a 

 

3

 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. The ERC20 technical standard allows any individual to develop new digital asset tokens that can be traded 

on the Ethereum blockchain. 

4

 The Squeeth Index tracked the price of ether squared relative to USDC. 

5

 “Minting” refers to the process of creating digital assets on a blockchain network. 
4 

position fell below 150% but was subsequently increased to above that threshold, the position 

would no longer be subject to liquidation. 

Although Respondent 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. Respondent also did 

not maintain a CIP and did not require that any user of the Opyn Protocol provide any 

identifying information as would have been a necessary precondition for Respondent to 

implement KYC and anti-money laundering procedures. 

Opyn developed and deployed the fully automated smart contracts that held custody of 

users’ assets in the Opyn Protocol. Opyn retained a degree of control over the Opyn Protocol by 

retaining the ability to impose transaction fees on the minting of oSQTH, as well as the ability to 

effect a shutdown of the protocol, which would unwind all transactions. Opyn touted the 

security of its smart contracts and customer assets, stating that the protocol was “safe and 

dependable, and is audited . . . .” During the Relevant Period, Opyn never imposed any 

transaction fees or effected a shutdown of the Opyn Protocol. 

During the Relevant Period, the Opyn Protocol minted over 675,000 oSQTH tokens and 

executed over 4 million oSQTH transactions with a total notional volume of $540 million at the 

time of execution. Respondent earned no fees on those transactions. 

After the Division began an inquiry into Opyn’s unregistered activity, Opyn promptly 

took remedial action and provided substantial cooperation with the Division of Enforcement’s 

investigation, which materially assisted the investigation. In particular, Opyn took additional 

steps to block U.S. users’ access to the Opyn Protocol and voluntarily provided relevant 

information to Division staff. 

III. LEGAL DISCUSSION 

A. Ether and USDC are Commodities 

Ether and stablecoins such as USDC are encompassed in the definition of “commodity” 

in Section 1a(9) of the Act, and are subject to the applicable provisions of the Act and 

Regulations. See, e.g., CFTC v. Laino Group Ltd., No. 4:20-CV-03317, 2021 WL 4059385, at 

*6 (S.D. Tex. June 30, 2021) (“[B]itcoin, ether, and litecoin are ‘commodities’ pursuant to 7 

U.S.C. § 1a(9).”); United States v. Reed, No. 20-cr-500 (JGK), 2022 WL 597180, at *3-5 

(S.D.N.Y. Feb. 28, 2022); CFTC v. McDonnell, 287 F. Supp. 3d 213, 228-29 (E.D.N.Y. 2018); 

CFTC v. My Big Coin Pay, Inc., 334 F. Supp. 3d 492, 498 (D. Mass. 2018); In re Coinflip, Inc., 

CFTC No. 15-29, 2015 WL 5535736, at *2 (Sept. 17, 2015); In re Tether Holdings Ltd., 2021 

WL 8322874, CFTC No. 22-04 (Oct. 15, 2021); see also Retail Commodity Transactions 

Involving Certain Digital Assets, 85 Fed. Reg. 37,734-01, at 37,741 (June 24, 2020) (“As a 

commodity, virtual currency is subject to applicable provisions of the CEA and Commission 

regulations, including CEA section 2(c)(2)(D).”). 
5 

B. Opyn Operated as an Unregistered Swap Execution Facility in Violation of 

Section 5h(a)(1) of the Act and Regulation 37.3(a)(1) 

The SEF registration requirement applies to “multiple-to-multiple” platforms. Section 

1a(50) of the Act, 7 U.S.C. § 1a(50), defines a SEF as “a trading system or platform in which 

multiple participants have the ability to execute or trade swaps by accepting bids and offers made 

by multiple participants in the facility or system, through any means of interstate commerce, 

including any trading facility, that: (A) facilitates the execution of swaps between persons; and 

(B) is not a designated contract market.” 

Section 5h(a)(1) of the Act establishes the SEF registration requirement. The Act 

prohibits any person from operating a “facility for the trading or processing of swaps unless the 

facility is registered as a swap execution facility or as a designated contract market 

[‘DCM’] . . . .” 7 U.S.C. § 7b-3(a)(1). Regulation 37.3(a)(1) similarly requires any 

“person operating a facility that offers a trading system or platform in which more than one 

market participant has the ability to execute or trade swaps with more than one other market 

participant on the system or platform” to register as a SEF or DCM. 17 C.F.R. § 37.3(a)(1) 

(2022). 

 During the Relevant Period, utilizing the Opyn Protocol and Opyn’s website, Respondent 

operated a multiple-to-multiple trading platform designed to facilitate the trading of perpetual 

contracts whose value was based on the Squeeth Index, which in turn tracked the price of ether 

squared relative to USDC. Digital asset commodities include virtual currencies such as ether and 

USDC, which are commodities under Section 1a(9) of the Act, and the perpetual contracts are 

“swaps” under Section 1a(47) of the Act. However, Opyn did not register the platform as a SEF 

or DCM. Accordingly, Opyn violated Section 5h(a)(1) of the Act and Regulation 37.3(a)(1). 

C. Opyn 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.”6

 

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 

 

6

 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 the perpetual contracts on the 

Opyn Protocol, because (i) the transactions were not physically settled contracts of sale of the underlying 

commodities, but rather involved leveraged financially-settled positions; (ii) the positions did not require delivery of 

the underlying commodities within 28 days, but rather the positions could exist perpetually; and (iii) certain of the 

positions were subject to potential forced liquidation. See Retail Commodity Transactions Involving Certain Digital 

Assets, 85 Fed. Reg. 37,734-01 at 37,743-37,744 (June 24, 2020). 
6 

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. 

During the Relevant Period, utilizing the Opyn Protocol and Opyn’s website, Respondent 

offered to enter into, entered into, executed, and/or confirmed the execution of leveraged or 

margined retail commodity transactions with non-ECP persons, in the form of perpetual 

contracts whose value was based on the Squeeth Index, which did not result in actual delivery 

within 28 days. Opyn conducted an office or business in the United States for the purpose of 

soliciting, accepting, or otherwise dealing in such transactions. 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 Opyn 

violated Section 4(a) of the Act. 

D. Opyn Unlawfully Engaged in Activities That Could Only Lawfully Be 

Performed by Registered FCMs in Violation of Section 4d(a)(1) of the Act 

Section 1a(28) of the Act, 7 U.S.C. § 1a(28), in relevant part, defines an FCM as any 

individual, association, partnership, corporation or trust that engages in soliciting or in accepting 

orders for or acting as a counterparty in “a swap . . . [or] any agreement, contract, or transaction 

described in . . . section (2)(c)(2)(D)(i)” and, in connection therewith, “accepts any money . . . or 

property (or extends credit in lieu thereof) to margin . . . trades or contracts that result or may 

result therefrom.” Section 4d(a)(1) of the Act, 7 U.S.C. § 6d(a)(1), in pertinent part, makes it 

unlawful for any person to act as an FCM unless registered with the Commission as an FCM. 

As described above, Opyn, while not registered as an FCM, acted during the Relevant 

Period as an FCM as defined in Section 1a(28) of the Act by soliciting and accepting orders for 

swaps via the Opyn Protocol. Additionally, by creating and deploying smart contracts that were 

designed and intended to allow users of the Opyn Protocol to contribute collateral and establish 

perpetual contract positions, Opyn accepted property to margin these transactions. Therefore, 

Respondent violated Section 4d(a)(1) of the Act. 

E. Opyn Failed to Adopt a CIP in Violation of Regulation 42.2 

Regulation 42.2, 17 C.F.R. § 42.2 (2022), provides that every FCM shall comply with the 

Bank Secrecy Act and related regulations, which require the FCM to adopt a CIP to facilitate 

KYC diligence on the FCM’s customers. Regulation 42.2 applies to individuals and entities 

acting as unregistered FCMs. See, e.g., CFTC v. HDR Global Trading Limited, No. 1:20-cv08132, 2021 WL 3722183 at ¶ 39 (S.D.N.Y. Aug. 10, 2021) (consent order) (finding defendant 

who acted as an unregistered FCM liable for failing to adopt a CIP as required by Regulation 

42.2); In re bZeroX, LLC, CFTC No. 22-31, 2022 WL 4597664 (Sept. 22, 2022) (same). 

During the Relevant Period, by acting as an unregistered FCM, Opyn was required to 

adopt a CIP but failed to do so. In so doing, Respondent violated Regulation 42.2. 
7 

IV. FINDINGS OF VIOLATIONS 

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

Respondent violated Sections 4(a), 4d(a)(1) and 5h(a)(1) of the Act, 7 U.S.C. §§ 6(a), 6d(a)(1), 

7b-3(a)(1), and Regulations 37.3(a)(1) and 42.2, 17 C.F.R. §§ 37.3(a)(1), 42.2 (2022). 

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 
8 

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 Sections 4(a), 

4d(a)(1) and 5h(a)(1) of the Act, 7 U.S.C. §§ 6(a), 6d(a)(1), 7b-3(a)(1), and 

Regulations 37.3(a)(1) and 42.2, 17 C.F.R. §§ 37.3(a)(1), 42.2 (2022); 

2. Orders Respondent to cease and desist from violating Sections 4(a), 4d(a)(1) and 

5h(a)(1) of the Act, and Regulations 37.3(a)(1) and 42.2; 

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

and fifty thousand US dollars ($250,000), 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 

4. 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. Opyn, Inc., and its successors and assigns shall cease and desist from violating Sections 

4(a), 4d(a)(1) and 5h(a)(1) of the Act, 7 U.S.C. §§ 6(a), 6d(a)(1), 7b-3(a)(1), and 

Regulations 37.3(a)(1) and 42.2, 17 C.F.R. §§ 37.3(a)(1), 42.2 (2022). 

B. Respondent shall pay a civil monetary penalty in the amount of two hundred and fifty 

thousand US dollars ($250,000) (“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:
9 

MMAC/ESC/AMK326 

Commodity Futures Trading Commission 

Division of Enforcement 

6500 S. MacArthur Blvd. 

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 Opyn, Inc.’s 

successors and assigns, agents or employees under its 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 its agents and/or employees under 

its 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 number and mailing 

address 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