The SEC has filed a case against Kraken cryptocurrency exchange for violating securities rules, alleging an operation as unregistered broker-dealer. Kraken denies the allegations.
Kraken’s current legal situation
The U.S. Securities and Exchange Commission (SEC) announced a legal action against Kraken, a popular cryptocurrency exchange based in the United States. The SEC accuses Kraken of providing its customers with unauthorized securities and mixing client funds totaling $33 billion, creating a “significant risk” for users.
The SEC complaint
According to the SEC complaint filed on November 20th, Kraken allegedly operated as an unregistered broker-dealer, clearing agency, and exchange. Additionally, the company is said to have facilitated trades in unauthorized securities, including tokens such as MATIC, NEAR, and ALGO, and did not maintain adequate internal records.
Kraken’s response
The SEC is now seeking the implementation of fines, disgorgement of illicit profits, and the cessation of Kraken’s activity. However, Kraken has expressed its intention to fight the complaint, underlining the absence of fraud, market manipulation, customer losses due to hacking or security breaches, or fiduciary duty violations in this case’s allegations.
The company contests the technical argument of the complaint, arguing that the digital assets it supports do not require special licenses as they are not considered “investment contracts”.
Similar accusations with other cryptocurrency exchanges
This is not the first case of this sort. Similarly, Binance and Coinbase have previously faced similar charges from the SEC and both have promised to legally contest the allegations.
Despite the legal accusations, Kraken has confirmed that it will continue to provide its services “without interruption”. It’s noteworthy that the SEC withdrew a similar complaint against Ripple in October, 34 months after initially filing the case.
