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US SEC sues crypto trading platform Kraken

PUNJAB NEWS LINE | November 22, 2023 03:15 AM

WASHINGTON: The US Securities and Exchange Commission (SEC) has charged crypto trading platform Kraken for operating as an unregistered securities exchange, broker, dealer and clearing agency.

According to the SEC’s complaint, since at least September 2018, Kraken has made hundreds of millions of dollars unlawfully facilitating the buying and selling of crypto asset securities.

“We allege that Kraken made a business decision to reap hundreds of millions of dollars from investors rather than coming into compliance with the securities laws. That decision resulted in a business model rife with conflicts of interest that placed investors’ funds at risk,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

“Kraken’s choice of unlawful profits over investor protection is one we see far too often in this space, and we’re holding Kraken accountable for its misconduct and sending a message to others to come into compliance,” he said in a statement.

The SEC alleged that Kraken intertwined the traditional services of an exchange, broker, dealer, and clearing agency without having registered any of those functions with the Commission as required by law.

Kraken’s alleged failure to register these functions has deprived investors of significant protections, including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest, among others.

In February this year, Kraken agreed to cease offering or selling securities through crypto asset staking services or staking programmes and pay a civil penalty of $30 million.

The SEC earlier sued some of the world’s largest cryptocurrency exchanges Coinbase and Binance.

 
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