SEC Charges Kraken with Unregistered Securities Exchange Violation
The U.S. Securities and Exchange Commission (SEC) has filed new charges against the crypto exchange Kraken. The SEC alleges that Kraken ran its crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency, raking in hundreds of millions of dollars illegally.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, accused Kraken of prioritizing profits over investor protection, saying the exchange’s business model created conflicts of interest and put investors’ funds at risk.
Cynthia Lummis Condemns SEC’s Regulatory Approach
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Saying that the SEC’s latest move is another example of “ruling by enforcement,” Wyoming Senator Cynthia Lummis insists that it’s time for Congress to pass a regulatory framework that provides clear rules to the SEC on what is a security and what is a commodity. According to Lummis, a federal digital asset regulation bill should be passed early next year.
Regulator’s Prior Actions and Kraken’s Response
Kraken, facing different charges earlier this year, ceased its staking services and agreed to pay a civil penalty of $30 million to the SEC. Kraken’s co-founder Jesse Powell criticized the SEC, implying that the penalties were essentially an extortion tactic to squeeze money out of the company. He pointed out that the cost of fighting the SEC in court would likely exceed $100 million.
Hot Take
The SEC charges against Kraken highlight a restrictive regulatory environment that has become a growing concern in the cryptocurrency industry.
