SEC Lawsuit Against Kraken
The United States Securities and Exchange Commission (SEC) has faced backlash from the cryptocurrency community for filing lawsuits against digital currency corporations, including Kraken, a major cryptocurrency exchange. The SEC alleges that Kraken has violated federal laws by operating as a broker, dealer, exchange, and clearing agency without registering with the regulator.
What SEC Alleges
The SEC states that since 2013, Kraken has operated an online trading platform allowing customers to buy and sell cryptocurrency assets that are considered investment contracts under United States securities laws. The agency likewise accused Kraken of commingling customer cryptocurrency assets valued at over $33 Billion and more than $5 Billion in customers’ cash with its own.
Kraken’s Response
Kraken has vowed to vigorously defend its position in court, stating that the SEC’s complaint alleges no fraud, market manipulation, customer losses due to hacking, compromised security, or breaches of fiduciary duty. The company argues that the SEC’s assert that digital assets on their platform are investment contracts is incorrect as a matter of law and fact.
Example of Ripple
Kraken referenced the case against Ripple to facilitate its argument, highlighting the court’s rejection of the SEC’s theory that digital assets purchased and sold on platforms of trading are securities transactions. The SEC had accused Ripple of illegal sales of the XRP token, but a judge ruled that retail sales of XRP were not securities sales.
Ripple’s chief legal officer likewise criticized the SEC’s chairman for prejudging the industry and the failed case against Ripple.
Hot Take: Regulators vs. Cryptocurrency Industry
The ongoing legal battles between regulators like the SEC and prominent digital currency corporations like Kraken and Ripple reflect the growing tension between traditional financial authorities and the innovative digital asset space. These disputes have whole lot of implications for how digital assets are regulated and traded in the future.
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