Kraken Founder Warns of New Threats to Crypto Industry
Jesse Powell, the founder of Kraken, has expressed concern about the reputation of the crypto industry following the recent saga involving Binance founder Changpeng Zhao. While Powell did not celebrate the outcome of the Binance investigation, he stated that it made the industry feel more fair, despite the emergence of new threats.
The SEC’s Investigation on Kraken
Powell, who stepped down as CEO of Kraken in April, has become a key figure in the crypto industry, particularly in the United States. The exchange he co-founded has faced regulatory scrutiny due to its operation from American soil. Despite expectations that exchanges like Coinbase and Kraken would gain an advantage during the crackdown on crypto by regulators such as the SEC, they were both sued earlier this year.
Powell criticized the lawsuit against Kraken, claiming that it was a matter of convenience for the SEC rather than going after offshore offenders. A $30 million settlement had already been reached between Kraken and the SEC earlier this year.
Regulators Seeking Scapegoats?
The lack of regulatory clarity and public trust in the crypto industry has made Binance’s situation critical for determining its future. The focus has shifted to cryptocurrencies’ use for illicit purposes, undermining efforts to improve transparency. Powell believes that regulators are taking advantage of dodgy transactions to scapegoat crypto and tighten regulations.
The notion that cryptocurrency is primarily used for money laundering by bad actors is not new, but it is misleading. Major banks like Deutsche Bank and HSBC have faced fines and enforcement actions for money laundering incidents over the years.
A Pattern Not Unique to Crypto
Binance’s $4.3 billion fine reflects its failure to comply with proper registrations and implement adequate know-your-customer controls, according to the Commodity Futures Trading Commission. However, this failure should not be seen as representative of the entire industry. Traditional finance giants like Deutsche Bank, HSBC, and JPMorgan Chase have also faced similar enforcement actions for money laundering incidents.
The International Consortium of Investigative Journalists discovered that global banks facilitated over $2 trillion in transactions flagged as possible illicit activity. These transactions enabled criminal organizations and corrupt governments to operate for years.
Hot Take: The Future of Crypto
The recent events surrounding Binance and other crypto companies have raised doubts about the role of cryptocurrency in today’s economic system. However, it is important to recognize that the actions of a few should not define an entire industry. With increased regulatory clarity and efforts to combat illicit activity, the crypto industry can continue to evolve and gain public trust. It is crucial for regulators and industry leaders to work together to address challenges and promote responsible innovation in the crypto space.
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