The Securities and Exchange Commission has recently filed a complaint against the cryptocurrency exchange Kraken. According to Protos, the SEC alleges that Kraken has been functioning as an unregistered national securities exchange, broker, and clearing house. Kraken’s Monday announcement has sparked a strong rebuttal from the company, which is prepared to fiercely contest these allegations.
Kraken’s multi-million dollar controversy
According to the SEC, Kraken’s operations have generated hundreds of millions of dollars through the unlawful sale of crypto tokens. The commission categorizes such tokens as securities. This activity, the SEC argues, has deprived investors of crucial protections. The commission further criticizes Kraken for what it describes as deficient business practices, including poor internal controls and record-keeping, leaving its users vulnerable to various risks.
Former Kraken CEO responds to SEC allegations
In a direct response to the SEC’s charges, Jesse Powell, Kraken’s former CEO, expressed his discontent. Powell labeled the actions an assault on innovation, referring to the SEC as America’s “top decel” — i.e., a technology pessimist. He warned smaller U.S. crypto firms about the potential risks of remaining in the country under the SEC’s scrutiny.
This is not the first time Kraken has been in the SEC’s crosshairs. The company previously settled for $30 million in a case involving unregistered securities offered through its crypto lending and staking programs. Despite these past issues, Kraken maintains that the SEC has not provided a transparent and straightforward path for registration, leading to regulatory ambiguity.
In its firm response to the SEC’s complaint, Kraken emphasizes the need for legislative clarity. The company criticizes the SEC’s enforcement-based regulation, arguing it hinders consumers, stifles innovation, and weakens U.S. global competitiveness. Kraken urges Congress to step in and provide the necessary regulatory framework to guide the crypto industry.
