In the US Securities and Exchange Commission’s (SEC) ongoing regulatory crackdown, regulators have turned their attention to US-based crypto exchange Kraken.
According to recent reports, the SEC has filed a lawsuit against the exchange, accusing it of operating an unregistered trading platform for cryptocurrency assets.
The complaint alleges that Kraken has generated substantial fees and trading revenue without adhering to securities laws designed to protect investors.
SEC Targets Kraken In Ongoing Crypto Crackdown
In the complaint against Payward Inc. and Payward Ventures Inc., the entities behind Kraken, the SEC claims that Kraken has violated securities laws by failing to register as an exchange, clearing agency, and broker-dealer.
The SEC also alleges the commingling of funds and highlights internal practices that raise concerns. It is worth noting that Kraken has been entangled in a legal case with the SEC since February 2023, when it agreed to discontinue an unregistered offering and sale of a crypto asset staking-as-a-service program, settling the charges by paying $30 million.
According to pro-crypto lawyer Collins Belton, the recent SEC case against the exchange appears to echo similar allegations made against Coinbase. The SEC claims that certain assets traded on Kraken are securities, thereby asserting that Kraken operates an unregistered exchange.
Belton humorously remarks on the SEC’s use of the defined term “Kraken-Traded Securities” and playfully suggests coining the term “Beltonian-Backed Assets” for the assets he supports. While Belton finds some aspects of the case worth considering, he does not find them compelling enough to warrant further analysis at present.
Crypto Exchange Battle
The SEC’s lawsuit against the company adds to the growing regulatory pressures faced by major cryptocurrency exchanges. With Coinbase and Binance already subject to SEC scrutiny, the legal battle with Kraken underscores the need for exchanges to navigate complex securities laws and adhere to regulatory requirements.
The allegations of commingling and internal practices raise additional concerns about the exchange’s operations. As the case progresses, the outcome will have implications for the broader crypto industry and may influence future regulatory approaches.
So far, the exchange has not officially responded to the SEC’s lawsuit. It remains to be seen how the case will unfold and what impact it will have on the firm and the industry.
Featured image from Shutterstock, chart from TradingView.com
Source: https://bitcoinist.com/kraken-exchange-under-siege-sec-files-lawsuit/