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 <p class="paragraph">Despite criticism coming from the cryptocurrency community, the United States Securities and Exchange Commission (SEC) has continued to file lawsuits against cryptocurrency companies, the latest being Kraken, one of the largest crypto exchanges in the world.</p>
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 <p class="paragraph">Specifically, the SEC has raised claims against the San Francisco-based crypto trading firm, stating it has broken federal laws by operating “as a broker, dealer, exchange, and clearing agency” without registering with the regulator, according to the lawsuit filed on November 20.</p>
 <h2 class="wp-block-heading" id="h-what-sec-alleges">What SEC alleges</h2>
 <p class="paragraph">As it happens, the SEC’s lawsuit states that:</p>
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  <p class="paragraph">“Since 2013, Kraken has operated an online trading platform through which its customers can buy and sell crypto assets, many of which form the basis of investment contracts covered under U.S. securities laws.”</p>
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 <p class="paragraph">This way, the SEC claims that “Kraken has created risk for investors and taken in billions of dollars in fees and trading revenue from investors without adhering to or even recognizing the requirements of the US securities laws (…) designed to protect investors.”</p>
 <p class="paragraph">On top of that, the agency accused the exchange of commingling “customer crypto assets valued at more than $33 billion” and “more than $5 billion” in customers’ cash with its own, “creating what its independent auditor had identified in its audit plan as ‘a significant risk of loss’ to its customers.”</p>
 <h2 class="wp-block-heading" id="h-kraken-s-retort">Kraken’s retort</h2>
 <p class="paragraph">On the other hand, the crypto exchange has not remained silent to the claims vowing to “vigorously defend our position in court” as the SEC’s complaint “alleges no fraud, no market manipulation, no customer losses due to hacking or compromised security, and no breaches of fiduciary duty.”&nbsp;</p>
 <p class="paragraph">As the Kraken team explained:</p>
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  <p class="paragraph">“Instead, the complaint makes a technical argument that Kraken’s business requires special securities licenses to operate because the digital assets we support are really ‘investment contracts.’ This is incorrect as a matter of law, false as a matter of fact, and disastrous as a matter of policy.”</p>
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 <h2 class="wp-block-heading" id="h-example-of-ripple">Example of Ripple</h2>
 <p class="paragraph">Indeed, the company said that the securities agency had already tried to assert its theory that “digital assets bought and sold on trading platforms were really securities transactions,” referring to the case against blockchain company Ripple as an example and adding that the court had “rejected it outright.”</p>
 <p class="paragraph">As a reminder, the SEC had accused Ripple of illegal sales of the XRP token, which the agency considered a security, but Judge Analisa Torres ruled on July 13, 2023, that retail sales of XRP were not securities sales, in a legal saga that captured the attention of the wider crypto sector.</p>
 <p class="paragraph">More recently, Ripple’s chief legal officer, Stuart Alderoty, criticized the SEC’s chairman, Gary Gensler, for having “prejudged” the crypto industry and the “failed case” against Ripple, starting with the “ethically compromised Bill Hinman,” whose 2018 speech was a key piece of evidence, Finbold reported on November 20.</p>
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<p>Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/here-s-why-the-sec-sued-kraken-tbt71043.html">https://thebittimes.com/here-s-why-the-sec-sued-kraken-tbt71043.html</a></p>

Here’s why the SEC sued Kraken

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TheBitTimes

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