Tuesday, February 27, 2024

SEC Charges Crypto’s Kraken of Running Unregistered Exchange. Cryptured

Less than a year after a $30 million settlement with the cryptocurrency exchange Kraken for other alleged conduct was revealed, the US Securities and Exchange Commission accused the company of violating securities laws.

The regulator said on Monday, in yet another blow to the cryptocurrency industry, that Kraken occasionally paid expenditures from bank accounts that contained client funds and mixed customer assets with its own.

In addition, the SEC claimed that the company was functioning without the required registration as an exchange, broker, dealer, and clearing agency. The agency has filed lawsuits against the digital asset sites Coinbase and Binance for their purported shortcomings, which the firms refute.

The SEC has accused Kraken of prioritizing profits over investor protection, resulting in a business model that put investors’ funds at risk. Kraken’s failure to comply with securities laws led to a system rife with conflicts of interest, jeopardizing the safety of investor assets.

$43 billion in revenue

The complaint claimed that Kraken generated over $43 billion in income from trading-based transactions in 2020 and 2021 combined.

Kraken declared that it will “vigorously defend” its stance and disagreed with the SEC’s allegations in a post on X, the platform that was formerly known as Twitter.

Without a single statute to back up their claims and without a clear way to register, the SEC has consistently challenged cryptocurrency exchanges to come in and register, according to Kraken.

The exchange stated that the company will “continue to provide services to our clients without interruption” and that the most recent changes have no bearing on its product offering.

The action is unrelated to the regulator’s deal with Kraken from February and was filed in federal court in San Francisco. In accordance with the judgment, Kraken agreed to stop offering the staking service in the US and paid $30 million to resolve SEC claims that the company’s service amounted to an unlawful sale of securities.

Gensler’s Crackdown

Under Chair Gary Gensler, the SEC argues that many digital currencies and cryptocurrency exchanges are under its regulatory jurisdiction. The hazards revealed by Sam Bankman-Fried’s FTX exchange’s insolvency have prompted the agency to seek multiple enforcement actions against major players in the market. According to Gensler, there is a lot of fraud and wrongdoing in the cryptocurrency space.

As it did in the cases against Coinbase and Binance, the regulator cites a variety of tokens in the Kraken complaint and asserts that those assets are securities.

In crypto instances, the SEC has recently seen some hurdles. When it came to the question of whether the XRP cryptocurrency is a security, Ripple Labs Inc. defeated the government in court earlier this year. In response to the SEC’s objections, Grayscale Investments LLC was officially successful last month in its attempt to establish a spot Bitcoin exchange-traded fund, according to a US federal appeals court.

Tuesday’s trade in the Asia-Pacific cryptocurrency markets was stable in the wake of the SEC’s lawsuit against Kraken. The possibility of a resolution to the US Justice Department’s investigation into Binance sparked a Monday increase in major tokens like Bitcoin, Ether, and BNB, but the rise eventually leveled down.

As of 9:41 a.m. in Singapore, Bitcoin, which has more than doubled this year in a partial recovery from the 2022 crypto meltdown, was trading at $37,532.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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