SEC Files Lawsuit against Kraken
The US Securities and Exchange Commission (SEC) recently filed a lawsuit against Kraken, accusing it of operating as an unregistered online trading platform and mixing user funds with its own.
According to the SEC, Kraken was acting as a “broker, trader, exchange, and clearing agency” without any regulatory approval. This allegedly posed a “significant risk of loss” to clients, with client assets valued up to $33 billion mixed with Kraken’s own funds.
As a result, the SEC is seeking monetary sanctions and the return of “ill-gotten gains“.
Kraken’s Response to SEC’s Allegations
In response to the SEC’s allegations, Kraken firmly denied the accusations and claimed that it never listed unregistered securities.
The cryptocurrency platform maintains that the funds mixing allegations are simply a result of using the already collected fees. Kraken insists that no user funds are missing or misused.
Kraken also criticizes the SEC’s enforcement approach, which it deems harmful to US consumers and a hindrance to innovation and global competitiveness.
Jesse Powell, co-founder of Kraken, expressed his dissatisfaction with the SEC, calling it the “primary roadblock” in the US.
Reminder of the Uncertain Regulatory Framework in the US
Kraken argues that the SEC is demanding compliance with a non-existent regulatory regime, as the SEC seeks to apply existing securities laws to cryptocurrency exchanges.
This lawsuit against Kraken follows similar cases brought against Binance and Coinbase in June, widening the regulatory scrutiny of cryptocurrency exchanges in the US.