Kraken claims to be catering to over 10 million users
The SEC has filed an official complaint against Kraken in a district court in San Francisco
Photo Credit: Unsplash/ PiggyBank
Kraken, the crypto trading platform based in the US, has found itself under legal scanner in the US. The Securities and Exchange Commission (SEC) of the US has sued Kraken for operating its business without having registered it officially. The next few days could be tumultuous for the international crypto sector with this probe being initiated against Kraken and with Binance CEO Changpeng Zhao admitted to having flouted US' anti-money laundering laws this week.
In Kraken's case, the SEC believes that the trading platform has minted millions of dollars between 2018 and 2023 — all of which classify as illegal earnings.
“The SEC alleges that Kraken intertwines 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,” said an official statement from the SEC.
The SEC is concerned that Kraken's failure to register its operations kept its users unprotected against market risks. In addition, Kraken also kept users from market protections like inspection by the SEC and safeguards against conflicts of interest.
“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.
Meanwhile, Dave Ripley, the CEO of Kraken has denied SEC's allegations via a post on X. Ripley also claimed that there is no clear path to register with the SEC, calling its allegations ‘factually incorrect'.
Team Kraken has also posted an official blog post stating that it strongly disagrees with the SEC and that the laws of the US are on its side.
The SEC, for now, has filed an official complaint against Kraken in a federal district court in San Francisco, US. It now seeks a remedy that would restrain other crypto players to do so. In addition, the SEC is also demanding disgorgement of ill-gotten gains plus interest along with penalties.
Founded in the US back in 2011, Kraken claims to be serving to over 10 million users from different parts of the world.
In the last day, the value of Kraken's native Basic Attention Token (BAT) dropped by 6.40 percent. It is currently trading at the price point of 0.2034 (roughly Rs. 16.95) as per CoinMarketCap.
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