Cryptocurrency

United

Chair

Gary

Cryptocurrency exchange Kraken has come under the radar of the United States Securities and Exchange Commission (SEC) again. This time around, the crypto firm is being accused of <a href="https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-237.pdf" rel="noopener noreferrer nofollow">illegally operating as a securities exchange</a> as it failed to register with the appropriate authority. Notably, the lawsuit was directed at Kraken’s parent firms, Payward and Payward Ventures.
Noteworthy, this new charge against Kraken is one of the SEC’s strategies to establish its position in crypto operations in the United States. Much more, Gary Gensler, SEC Chair is doing all possible to bring the U.S. crypto industry under his jurisdiction.&nbsp;
<h2 id="b-kraken-failed-to-register-the-exchange-b">Kraken Failed to Register the Exchange&nbsp;</h2>
The charge is a matter of securities law violation according to the SEC filing. Precisely, the SEC wrote in a court filing in the U.S. District Court for the Northern District of California that “Without registering with the&nbsp;SEC in any capacity, Kraken has simultaneously acted as a broker, dealer, exchange&nbsp;and clearing agency with respect to these crypto asset securities.”
“In doing so, Kraken&nbsp;has created risk for investors and taken in billions of dollars in fees and trading&nbsp;revenue from investors without adhering to or even recognizing the requirements of&nbsp;the U.S. securities laws that are designed to protect investors,” the filing read.
<h2 id="b-kraken-accused-of-commingling-customers-assets-b">Kraken Accused of Commingling Customers’ Assets</h2>
The regulator went on to recall the times when Kraken commingled customers’ assets worth about $33 million which it held with its assets.&nbsp;
This act was categorized in Kraken’s audit report by its independent auditor as a significant risk of loss to its customers. Another time, the customers’ assets held by Kraken were running into $5 billion and the exchange also commingled the funds.
The SEC claims that a number of the exchange’s activities including its business practices, internal controls, and record keeping, pose additional risks to investors. In the regulator’s opinion, many of these risk-related offerings would not be accepted for a regulated securities exchange.&nbsp;
<h2 id="b-kraken-defends-itself-against-sec-b">Kraken Defends Itself Against SEC</h2>
Kraken plans to defend itself this time around as it has asked Congress to establish a concise framework for the regulation of cryptocurrencies and crypto exchanges. 
It has also assured its customers that the SEC’s claim which Kraken tagged “incorrect as a matter of law, false as a matter of fact, and disastrous as a matter of policy” would not affect any of its obligations to customers.
&nbsp;Meanwhile, the San Francisco based exchange is&nbsp; currently <a href="https://thecoinrise.com/kraken-to-follow-coinbase-footsteps-with-layer-2-launch/" rel="noopener noreferrer nofollow">considering the launch of a Layer-2 network just like Coinbase</a>.
The post <a href="https://thecoinrise.com/u-s-sec-sues-kraken-for-securities-law-violation/" rel="noopener noreferrer nofollow">U.S. SEC Sues Kraken For Securities Law Violation</a> appeared first on <a href="https://thecoinrise.com" rel="noopener noreferrer nofollow">Latest News and Insights on Blockchain, Cryptocurrency, and Investing</a>.

U.S. SEC Sues Kraken For Securities Law Violation

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