- The SEC has filed a lawsuit against Kraken.
- The SEC alleges that the exchange conducted unregistered trades.
- Kraken is also accused of commingling funds.
In a recent development, the US Securities and Exchange Commission (SEC) filed a lawsuit against cryptocurrency exchange Kraken, adding it to the list of platforms accused of operating as securities firms in the US without proper registration.
The SEC alleges that Kraken engaged in unregistered activities and operated as an unregistered broker, clearing agency, and dealer. The federal regulator alleges that Kraken traded numerous tokens deemed to be securities without complying with federal securities laws.
The lawsuit identifies certain tokens, including Algorand (ALGO), Polygon (MATIC), and NEAR Protocol (NEAR), as unregistered securities that Kraken traded. The SEC claims that Kraken played a direct role in promoting these tokens to the investing public.
Fund mix
Specifically, the SEC notes that Kraken commingled up to $33 billion in customer cryptocurrencies with its own company assets, which it says poses a “significant risk.”
The regulator alleges that Kraken also commingled more than $5 billion of its customers’ cash with its own and even used customer funds directly for operational expenses.
In response, Kraken advocates for clear regulation
In response to the SEC’s allegations, Kraken issued a statement reiterating that it disagrees with the complaint. The cryptocurrency exchange defends its position, emphasizing that it does not list securities and expressing disappointment with the SEC’s regulatory approach.
Kraken advocates for effective U.S. market regulation tailored to the unique risks and benefits of cryptocurrencies. The exchange suggests that congressional action is necessary to address the current lack of regulatory clarity in the US and criticizes the SEC’s regulatory approach as harmful to consumers and detrimental to innovation in the cryptocurrency space.
As the lawsuit progresses, Kraken, Coinbase and Binance are in the shared spotlight, navigating the cryptocurrency industry’s regulatory landscape under increasing scrutiny from the SEC.
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