Kraken, one of the largest crypto exchanges in the world, is facing another lawsuit from the U.S. Securities and Exchange Commission (SEC), which accuses it of violating securities laws. The exchange’s co-founder, Jesse Powell, has slammed the SEC as the country’s “top level” and urged other crypto firms to flee the U.S.
On Nov 21, Powell posted on X (formerly Twitter), calling the regulator the “USA’s top decel.” Tech folks often use this language to suggest someone is slowing things down. He expressed that the SEC wasn’t pleased with the $30 million fine Kraken had to pay in February.
The SEC filed a lawsuit against Kraken on Nov 20, alleging that the exchange failed to register as a securities broker and commingled customer and corporate funds with the agency. The regulator also claimed that Kraken offered unregistered securities to U.S. customers through its staking program, which allows users to earn rewards by locking up their crypto assets.
The lawsuit comes after Kraken agreed to pay $30 million in February to settle a previous SEC charge that it violated securities laws by offering its staking service without registering. Powell said the SEC wasn’t satisfied with the settlement and was trying to extort more money from the exchange.
Powell also criticized the SEC for hindering the innovation and growth of the crypto industry in the U.S. and warned other crypto companies to leave the country to avoid legal troubles.
“$30m buys you about ten months before the SEC comes around to extort you again. Lawyers can do a lot with $30m, but the SEC knows that a real fight will likely cost $100m+ and valuable time. If you can’t afford it, get your crypto company out of the U.S. warzone,” Powell said.
Kraken Denies SEC Allegations & Vows To Fight Back
Kraken denied the SEC’s allegations and said it would defend its position in court. The exchange said it never listed unregistered securities and that its staking program complied with the law.
Kraken also said the SEC’s commingling accusations were baseless, and the regulator didn’t allege any missing user funds.
“The SEC’s complaint is disappointing, and we intend to defend ourselves in court vigorously. We believe the SEC’s allegations are without merit and that we have always acted in the best interests of our customers and the crypto community,” a Kraken spokesperson said.
Kraken is not the only crypto company that has clashed with the SEC over securities laws. The regulator has also sued Ripple, Coinbase, and several other crypto firms, sparking a debate over the need for more transparent and fairer regulations for the crypto industry.
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