Kraken founder Jesse Powell warned: “A new threat to the industry’s reputation” After the incident that led to the resignation of Binance founder Changpeng Zhao. Powell Doesn’t Congratulate Binance Survey Results express This decision left the industry feeling “fairer” despite what happened. “New threat”.
There is no doubt that the US and EU are taking a harsh stance on cryptocurrencies.
The SEC is also tracking Kraken
Powell, who stepped down as CEO of Kraken in April, has become one of the most important players in the cryptocurrency industry, especially in the United States. The exchange Powell co-founded in 2011 became one of the only companies to operate on U.S. soil, making it highly vulnerable to regulatory scrutiny.
As the Securities and Exchange Commission (SEC) and other regulators cracked down on cryptocurrencies, many believed that exchanges like Coinbase and Kraken would gain a competitive advantage. But that wasn’t the case.
Kraken and Coinbase were sued by regulators earlier this year, despite cooperating with regulators in the past. Powell was critical of the lawsuit against Kraken. “The SEC is clearly bringing cases out of convenience” because it is easier than “going after the most serious criminals overseas.”
The SEC and Kraken already reached a $30 settlement earlier this year, which led to the exchange discontinuing its staking services in the US. Powell explained that this lawsuit was again extortion. “With just $30 million, you can live for about 10 months.”
Are regulators looking for a scapegoat?
With regulators rejecting regulatory clarity and the cryptocurrency industry lacking public trust, Binance’s finances could be key in determining the future of cryptocurrency. Most of the debate now focuses on the use of cryptocurrencies for illicit purposes, which has further undermined the industry’s recent efforts to increase transparency.
Despite efforts by industry leaders to improve the reputation of cryptocurrencies through self-policing, malicious actors continue to emerge. According to Powell, regulators and governments are taking every advantage. “Illegal transaction” to “Use cryptocurrencies as a scapegoat and tighten the noose.”
The idea that cryptocurrencies are particularly useful for malicious actors to launder money is not new. In 2021, Janet Yellen claimed that cryptocurrencies were primarily used for illicit financing, a claim that was widely accepted despite being proven to be a false narrative by data from organizations such as Chainalytic and even the United Nations.
The way the case against Binance and its founder has been portrayed over the past few days has led many to believe that cryptocurrencies have no place in today’s economic system. However, this idea could not be further from the truth.
Patterns that are not unique to cryptocurrencies
Binance was fined $4.3 billion for failing to comply and operating without proper registration. “We have appropriate know-your-customer compliance controls in place”; According to the Commodity Futures Trading Commission.
Binance’s failure to stop illegal activities in its ecosystem has been viewed as unwillingness by regulators such as the SEC. However, these failures or rejections should not be portrayed as representative of the industry as a whole or apply only to that industry.
Earlier this year, Deutsche Bank was fined $186 million for failing to fix its money laundering controls. Some of these were caught by regulators eight years ago. Traditional financial giants such as HSBC, JPMorgan Chase and Danske Bank have also been the target of enforcement actions for similar cases over the past decade.
The International Consortium of Investigative Journalists found that in 2020, several global banks traded more than $2 trillion in transactions flagged as potentially illicit activity. Many of these deals have allowed Mexican drug cartels, terrorist organizations, crooks, and corrupt governments to operate for years.