SEC Investigating Crypto Exchange Kraken Over Securities Violations

The SEC is investigating San Francisco-based cryptocurrency exchange Kraken for violating securities laws, according to reports.

Bloomberg reported Wednesday that the investigation was at an “advanced stage” and “could lead to a settlement in coming days,” citing an unnamed person familiar with the matter.

Kraken is a digital assets exchange which allows customers to buy and sell cryptocurrencies like Bitcoin, Ethereum, and Dogecoin. It is the fourth largest exchange by daily volume, according to CoinGecko data.

Kraken declined Decrypt’s request for comment. 

It isn’t the first time the exchange has faced allegations of wrongdoing from federal authorities. In November, Kraken agreed to pay the U.S. Treasury Department’s Office of Foreign Assets Control $362,158.70 for apparent violations of sanctions against Iran.  

Its incoming CEO Dave Ripley said in September that the exchange had no plans to delist any coins or tokens the SEC had labelled as securities. 

The SEC has cracked down on crypto exchanges recently: In January, it hit Genesis and Gemini with charges for offering unregistered securities.

The SEC’s Chairman Gary Gensler claims that many cryptocurrencies—but not Bitcoin—are unregistered securities. A security is an investment tool used to raise capital in public and private markets.

More than ever before, the body is trying to regulate the crypto space: Last year, it launched 30 crypto-related enforcement actions, up 50% compared to 2021.

Gensler has said that the world of crypto is “significantly non-compliant” and that clear laws already exist with the intention of protecting consumers—but more needs to be done to protect investors.  

U.S. regulators are watching digital asset exchanges closely, especially after mega firm FTX crashed last year. 

FTX was one of the biggest exchanges in the space but blew up after it was allegedly criminally mismanaged. Its ex-CEO and co-founder Sam Bankman-Fried is now facing eight criminal charges—including wire fraud on customers and conspiracy to commit money laundering