SEC Legal Action Against Kraken: A Crypto Exchange Under Fire

• SEC Files Lawsuit Against Kraken Crypto Exchange
• Allegations Against Kraken Crypto Exchange
• SEC Attempts to Charge Kraken With Additional Violations
• Statements from the SEC
• Previous Legal Encounters and Penalties

SEC Files Lawsuit Against Kraken Crypto Exchange

The U.S Securities and Exchange Commission (SEC) has announced a lawsuit against the Kraken Crypto exchange. This lawsuit charges the exchange with operations as an unregistered securities exchange, broker, dealer, and clearing agency.

Allegations Against Kraken Crypto Exchange

According to details shared by the SEC, Kraken has, since at least September 2018, unlawfully facilitated the buying and selling of crypto asset securities, generating hundreds of millions of dollars. The SEC further claimed that Kraken operated the services of an exchange, broker, dealer and clearing agency without registering any of these functions, as demanded by the law.

SEC Attempts to Charge Kraken With Additional Violations

Besides operating as an unregistered entity, the SEC is also seeking to charge Kraken with other violations. This includes endangering customer information due to questionable business practices and poor record keeping. Kraken risks its customers' personal and financial information with its operations and has been found to mix its money with that of its customers, including paying operational expenses directly from accounts that hold customer cash, the SEC explained.

Statements from the SEC

Gurbir S. Grewal, the director of the SEC's Division of Enforcement, has shared his views on the lawsuit against Kraken. He stated, It has been alleged that Kraken chose to gain hundreds of millions of dollars from investors rather than comply with securities laws. This decision has led to a business model filled with conflicts of interest, putting investors' funds at risk. Kraken's preference for unlawful profits over investor protection is a pattern we frequently observe in this space. Today, we are holding Kraken accountable for its misconduct and urging others to comply.

Previous Legal Encounters and Penalties

The lawsuit was filed in San Francisco, CA. Earlier this year, the exchange consented to stop offering or selling securities through crypto asset staking services or staking programs. Additionally, it agreed to a civil penalty of $30 million. Kraken is yet to release any comments on the latest lawsuit by the SEC.

Edited by Jonathan Stoker