Kraken’s Confrontation with the SEC: Crypto Exchange Calls Out Regulatory Hostility

The United States regulatory landscape for cryptocurrency entities has become increasingly stringent, fostering a hostile atmosphere and prompting numerous crypto firms and their executives to reevaluate business operations. One such company, Kraken, recently found itself in the US Securities and Exchange Commission (SEC) crosshairs, leading to a heated response from its co-founder, Jesse Powell.

Powell, expressing his frustration on the X platform (formerly Twitter), lambasted the SEC as the “USA’s top decel” (decelerator), suggesting that the regulatory body’s actions are impeding progress in the crypto industry. The tirade follows the SEC’s lawsuit against Kraken, a move that Powell contends is driven by the regulator’s lingering discontent despite the exchange settling a $30 million penalty in February.

In his scathing critique, Powell accused the SEC of seeking a different regulatory jurisdiction in California after facing setbacks in New York. He questioned the SEC’s motives, stating, “I thought we settled all their concerns for $30 million in Feb. Now they’re back for seconds?”

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Furthermore, Powell highlighted what he sees as the SEC’s pattern of targeting crypto exchanges through regulatory enforcement, emphasizing a clear message: pay fines or face legal charges. He cautioned other crypto-related firms to consider exiting the US market, now resembling a “warzone” due to the SEC’s costly legal battles.

According to Powell, the $30 million settlement bought Kraken a brief respite before the SEC returned for more, asserting, “Message is clear: $30 million buys you about ten months before the SEC comes around to extort you again.”

The SEC’s latest legal battle against Kraken, initiated on November 20, alleges that the exchange operates as an unregistered securities exchange, dealer, clearing firm, and broker. The regulator claims that Kraken commingled users’ and the firm’s funds, amounting to approximately $33 billion.

The lawsuit echoes previous SEC actions against crypto firms, asserting that Kraken listed tokens such as Cardano (ADA), Solana (SOL), Polygon (MATIC), Algorand (ALGO), Cosmos (ATOM), and others as securities on its trading platform.

As the crypto community awaits the outcome of this latest legal confrontation, questions loom over whether Kraken will follow its previous course of delisting assets tagged as securities. The courtroom proceedings will ultimately unveil the next moves for the embattled exchange in this ongoing regulatory saga.


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