Crypto Community Rallies for Kraken as SEC Lawsuit Sparks Controversy

The recent legal lawsuit against crypto exchange Kraken, filed by the US Securities and Exchange Commission (SEC) has become even more complex.

At the same time, the agency’s enforcement faces criticism from crypto communities, prominent figures and members of Congress.

Following Binance and Coinbase, crypto giant Kraken has been thrust into the latest legal battle with the SEC. In response to the SEC’s allegations, Kraken has issued a resolute statement, firmly asserting that no securities have been listed on its exchange. The company has also vowed to defend its position vigorously in the court.

Kraken’s Executives: It’s Time to Leave the Market

The SEC came under fierce criticism for its enforcement. Kraken CEO David Ripley and co-founder Jesse Powell expressed disagreement with the accusations. Ripley argued that the SEC made false claims about the company’s operations and its approach to regulating crypto is counterproductive.

“The SEC allegations are factually incorrect, contrary to law, and the wrong way to create policy in the United States,” the Kraken CEO said in his post.

Meanwhile, Powell also voiced his disapproval of the SEC’s actions, believing they stifle the advancement and growth of the cryptocurrency industry. In his X post, he questioned the SEC’s motivations in targeting Kraken, especially after the company settled with regulators for $30 million in February.

Powell further added that the SEC is constantly seeking new avenues to punish cryptocurrency businesses rather than collaborating with them. The executive cautioned cryptocurrency firms to be prepared for substantial financial demands from the SEC to avert enforcement actions.

Powell believes that the SEC is exploiting its authority to extract money from cryptocurrency companies, and that those unable to withstand the SEC’s legal battles should consider leaving the United States.

Coinbase CEO Brian Armstrong previously expressed similar frustration with the SEC. The agency’s approach to regulating crypto, as Armstrong believes, would stifle the growth of the industry in the United States. He also said that Coinbase was looking at other jurisdictions where the regulatory environment is more favorable.

Many leading industry figures haven’t hesitated to rally back Kraken. Co-founder of Gemini Cameron Winklevoss expected that Kraken and Coinbase would continue to challenge the SEC in court and achieve favorable outcomes.

Today, the SEC filed a complaint alleging that Kraken operates as an unregistered national securities exchange, broker, and clearing house. We disagree with their claims and plan to vigorously defend our position. https://t.co/a0C4wzBo3f

— Kraken Exchange (@krakenfx) November 21, 2023

Congress Members Support Kraken

Not only crypto members, Kraken also received support from the U.S. Congress members, including Senator Cynthia Lummis and Warren Davidson.

In her disapproval of the SEC’s actions, Lummis called for the Congress’ establishment of a clear legal framework. Specifically, the politician underscored the importance of transparent rules in asset classification.

“The SEC cannot continue ruling by enforcement. Crypto asset companies have repeatedly tried to get guidance from the SEC only to be hit with enforcement actions, causing unnecessary harm to consumers,” said Lummis.

Meanwhile, Davidson quoted a statement from XRP lawyer John Deaton urging Kraken customers to unite and speak out. He also suggested the SEC Stabilization Act to remove the SEC chairman.

In its latest statement, Kraken stated that it supports Congressional action to create clear registration and oversight frameworks for centralized crypto trading platforms in the United States.

Kraken believes that agency is not the right path to create new law for centralized crypto trading platforms. Given how harsh the US has been, the exchange is likely correct.

Instead, Congressional action by elected lawmakers is necessary to establish a clear and fair regulatory framework for these platforms while ensuring that the nation remains at the forefront of the burgeoning crypto and Web3 landscape.

Kraken said that it has maintained a strong track record of advocating for practical and effective rules for digital assets. The company has consistently worked to ensure that U.S. consumers can safely access digital asset technology.