SEC Sues Kraken for Operating as Unregistered Exchange
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Kraken, accusing the cryptocurrency exchange of operating as an unregistered securities exchange, broker, dealer, and clearing agency. This comes as part of the SEC’s efforts to bring crypto assets under its jurisdiction. The commission argues that digital assets are investment contracts subject to federal securities laws. The SEC alleges that Kraken has unlawfully facilitated the buying and selling of crypto asset securities without registering with the regulator since at least September 2018.
Charges Against Kraken
The SEC’s allegations state that Kraken has functioned as an exchange by providing a marketplace for securities transactions from multiple buyers and sellers. It also accuses Kraken of acting as a broker by conducting securities transactions on behalf of customers, and as a dealer by buying and selling securities for its own account. Additionally, the SEC claims that Kraken mishandled customer information, commingled customer assets with its own, and put customers’ personal and financial information at risk due to deficient business practices.
Kraken’s Defense
Kraken has vowed to defend itself against the SEC’s lawsuit, arguing that Congress should be responsible for regulating crypto exchanges. The exchange believes that the SEC’s view on digital assets is legally incorrect, factually false, and harmful as a matter of policy. Kraken reassured its users that the lawsuit will not impact their accounts or the operations of the exchange.
Hot Take: SEC Cracks Down on Crypto Exchanges
The SEC’s lawsuit against Kraken is part of a broader crackdown on cryptocurrency exchanges. With Chair Gary Gensler leading the charge, the commission is asserting its jurisdiction over exchanges and digital tokens. This move follows the collapse of FTX and a series of enforcement actions launched by the SEC. Gensler has been vocal about his concerns regarding fraud and inappropriate conduct in the crypto space. The SEC’s actions against Kraken, Coinbase, and Binance indicate its determination to regulate the industry and protect investors.
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