Hassan Maishera
TL;DR
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The US SEC has accused Kraken of operating an unregistered platform.
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Kraken has joined Binance and Coinbase as target of the SEC.
Kraken Accused Of Operating An Unregistered Platform
The US Securities and Exchange Commission (SEC) has accused Kraken of operating an unregistered platform and improperly mixed customer funds. Kraken joins Binance and Coinbase as targets of the US SEC.
The regulatory agency filed the lawsuit on Monday, claiming that the San Francisco-based company violated federal securities laws. The lawsuit is similar to those it filed against Binance and Coinbase.
The SEC also claimed that the cryptocurrency exchange created a significant risk by commingling up to $33 billion in customer crypto with its own corporate assets. The suit said,
"Similarly, Kraken has held at times more than $5 billion worth of its customers' cash, and it also commingles some of its customers' cash with some of its own. In fact, Kraken has at times paid operational expenses directly from bank accounts that hold customer cash."
The regulatory agency added that Kraken operates an unregistered broker, clearinghouse and exchange, which is similar to its complaints against Binance and Coinbase, two exchanges the agency sued earlier this year.
The cases against Binance and Coinbase are still ongoing. The regulatory agency previously settled its case against Bittrex.
The SEC listed some tokens it deemed to be unregistered securities, including the Algorand token (ALGO), Polygon's MATIC and NEAR. the regulatory agency further claimed that Kraken played a direct role in promoting these tokens to the public.
While responding to the suit, Kraken said,
"We disagree with the SEC's complaint against Kraken, stand firm in our view that we do not list securities and plan to vigorously defend our position. The SEC has repeatedly challenged crypto exchanges to come in and register without a single law supporting their position and no clear path to registration. And despite opposition from lawmakers, the SEC continues to pursue legal action against these crypto exchanges. For years, we have advocated for effective U.S. market regulation that addresses the unique risks and benefits which crypto presents to all individuals. We believe Congressional action is the most appropriate path to resolving the lack of regulatory clarity in the U.S. It is disappointing to see the SEC continue down its path of regulation by enforcement, which harms American consumers, stunts innovation and damages U.S. competitiveness globally."
In its filing, the SEC seeks to permanently ban Kraken from operating as an unregistered exchange. The regulatory agency also wants to fine the cryptocurrency exchange for its role in promoting unregistered securities.
