Jesse Powell’s Perspective
The founder of Kraken, Jesse Powell, is taking a bold stance against the U.S. Securities and Exchange Commission (SEC) following a lawsuit filed against Kraken. Powell is frustrated with the SEC’s repeated targeting of Kraken despite a previous settlement of $30 million, accusing the SEC of extortion and citing prohibitively high legal defense costs.
In a Twitter post, Powell vehemently disputes the SEC’s claim, emphasizing that Kraken’s operations do not involve any form of fraud, market manipulation, or mishandling of customer funds.
Central to Kraken’s Defense
Central to Kraken’s defense is the argument that the digital assets it supports are not “investment contracts” and, thus, do not require special securities licenses. This stance is supported by a precedent where a Federal Court rejected a similar SEC theory. Powell asserts that the SEC’s current allegations are based on a flawed legal theory and lack substance.
This lawsuit forms part of a broader enforcement strategy by the SEC, targeting Kraken, Coinbase, Binance, and other platforms. The SEC argues that Kraken and these other platforms have been operating as an unregistered exchange, broker, and clearinghouse. The lawsuit prohibits Kraken from functioning as an unregistered exchange and demands restitution for “ill-gotten gains.”
Kraken’s Stance
In its official statement, Kraken refutes the SEC’s claims, emphasizing its intention to defend its position vigorously in court and stating that all of the SEC’s allegations are baseless. Kraken also challenges the SEC’s interpretation of digital assets as “investment contracts,” arguing that their business model does not warrant the need for special securities licenses.
Kraken highlights the absence of clear regulatory guidelines from the SEC for digital asset transactions, emphasizing the lack of specific laws or rules outlining how digital asset trades should be matched, cleared, or brokered. The company sees this as the SEC demanding compliance with non-existent regulatory frameworks.
Hot Take
Jesse Powell and Kraken are staunchly opposing the SEC’s lawsuit, arguing that the digital assets they support do not fall under securities regulations. The lawsuit forms part of a wider enforcement strategy by the SEC, targeting various crypto platforms. Powell and Kraken are standing firm and ready to vigorously defend their position in court.
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