The SEC sued cryptocurrency exchange Kraken for operating without a registered cryptocurrency exchange. This move is causing a lot of confusion within the cryptocurrency space amid the recent Binance-DoJ scenario.
Kraken’s Response to the SEC’s Motion for Summary Judgment.
San Francisco-based Kraken will vigorously defend its practices. The exchange argues that regulation of cryptocurrency exchanges falls under the jurisdiction of Congress, which has yet to enact legislation on the matter. In that view, the suit was legally flawed and ill-considered. It provided assurance to our large customer base of over 10 million customers that operations and services would not be disrupted.
In this regard, litigation has centered on PAYWARD INC. and PAYWARD VENTURES INC., d/b/a kraken since 2018. The SEC alleges that Kraken conducted cryptocurrency trading without complying with appropriate securities laws, citing, among other things, poor internal controls and inadequate record keeping. , failure to address investor safety issues, and even commingling of customer and company assets.
Impact of this lawsuit on the cryptocurrency world
The case forms part of SEC Chairman Gary Gensler’s broader strategy to regulate cryptocurrency markets according to traditional rules. This is similar to similar proceedings the SEC has taken against some of the most prominent cryptocurrency exchanges, including Binance and Coinbase, as it seeks to enforce federal securities laws against these digital assets in an effort to establish priority in the industry.
Kragen denies the SEC’s charges, specifically the “commingling” of funds that covered only fee payments. The SEC is expecting fines amounting to thousands of dollars, return of profits and action to prevent repeat fraud. For example, the outcome of the Kraken lawsuit will have a major impact on the laws governing how cryptocurrency exchanges are regulated, making it the focus of an important debate about the place of legislative bodies within the expanding digital currency market.