SEC sues cryptocurrency exchange Kraken

The U.S. Securities and Exchange Commission has sued Kraken, accusing the cryptocurrency trading platform of operating as an unregistered securities exchange, broker, dealer and clearing agency.

This comes after the U.S. Securities and Exchange Commission (SEC) filed similar charges against Binance and Coinbase, and just months ago Kraken reached a $30 million settlement with the regulator over its failure to register for a staking-as-a-service program .

The SEC alleges that Kraken intertwined traditional services of exchanges, brokers, dealers and clearing houses without registering any of those functions with the commission as required by law.

Kraken’s alleged failure to register these features “deprived investors of significant protections,” including SEC inspections, recordkeeping requirements and safeguards to prevent conflicts of interest.

Additionally, the SEC said Kraken commingled customer funds with its own funds, including paying operating expenses directly from accounts that held customer cash. Kraken also allegedly commingled its customers’ crypto assets with its own, thereby creating a “significant risk of loss” for its customers.

“We allege that Kraken made a business decision to obtain hundreds of millions of dollars from investors rather than comply with securities laws,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “This decision resulted in a business model fraught with conflicts of interest, Putting investors’ money at risk.”

In response, Kraken said: “We disagree with the SEC’s complaint against Kraken, maintain our view that our securities are not listed, and plan to vigorously defend our position.”

Information source: Compiled from FINEXTRA by 0x Information.Copyright belongs to the author and may not be reproduced without permission

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