The Cyprus Securities and Exchange Commission (CySEC) has imposed a €200,000 fine on Trek Labs Europe Ltd for a series of regulatory breaches prior to its rebranding.
Identified Violations
CySEC conducted an investigation into the company’s operations from March to November 2022. The probe uncovered deficiencies in organizational requirements, client communication standards, and procedures for assessing the suitability of products for retail clients.
CySEC cited possible violations of three key sections under the country’s Investment Services and Activities and Regulated Markets Law of 2017, including shortcomings in governance arrangements, failure to provide clients with clear information, and inadequate investor suitability checks.
History of Trek Labs and FTX EU
Trek Labs, previously known as FTX EU, had its Cyprus Investment Firm (CIF) license suspended in November 2022, just as FTX was facing one of the most dramatic collapses in crypto history. Following this, the company was put into administration and later rebranded as Trek Labs in an effort to recover its reputation and seek regulatory rehabilitation.
Funding Recovery for Users
Almost two months after the collapse, crypto exchange Backpack began processing fund claims for former users of FTX EU. Users need to undergo Know Your Customer (KYC) verification to regain access to their funds. The eligibility also hinges on a registration date, as users who signed up after March 7, 2022, may fall under FTX EU’s umbrella.
The penalty paid by the company closes CySEC's scrutiny without requiring a formal admission of wrongdoing. Regaining customer trust and ensuring proper claims for fund recovery remain key priorities for Trek Labs.
