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Kraken faces SEC accusations again: Confusing users, exchanging billions of dollars, listing numerous unregistered securities

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Kraken faces SEC accusations again: Confusing users, exchanging billions of dollars, listing numerous unregistered securities

The U.S. veteran exchange Kraken, after being accused by the SEC of operating unregistered margin trading services in February this year, is facing another civil lawsuit filed by the SEC, a situation similar to what happened with Coinbase previously.

Kraken faces a $30 million penalty for operating unregistered margin trading services, causing a drop in Coinbase's stock price.

SEC Files Another Lawsuit Against Kraken

According to legal documents, the SEC has brought multiple charges against Kraken:

  • Confusing users, exchange funds

  • Operating as an unregistered broker-dealer, clearing agency, and exchange

  • Listing a large number of unregistered securities including ALGO, MATIC, NEAR

The documents state that Kraken has confused up to $33 billion in user and exchange funds; meanwhile, it operated as an unregistered broker-dealer and exchange, similar to the recent lawsuits against Binance and Coinbase.

The SEC has once again listed many tokens that Kraken has listed as unregistered securities, and will impose fines on Kraken, while also seeking a permanent injunction to prevent Kraken from operating as an unregistered exchange.

SEC lists many public chain tokens

Kraken: Fighting Back

Kraken has released a statement emphasizing that it will fight back against the SEC in court, refuting all accusations and citing the Ripple lawsuit as a precedent, claiming that the SEC's theories do not hold up in court.

Kraken's current CEO, Dave Ripley, also retweeted the statement. He stated:

We strongly disagree with the SEC's accusations, firmly believing that we have not listed securities, and plan to vigorously defend our position. The SEC has repeatedly demanded exchanges to register, but there is no clear registration path in the U.S. We will bravely face all accusations.

Kraken's founder, Jesse Powell, was surprised by the SEC's accusations, thinking that after Kraken paid a $30 million fine to the SEC previously, the matter would be settled.

He criticized:

The message is clear, 10 months ago, Kraken's $30 million fine could have kept the SEC lawyers busy for a long time, now extorting again, the SEC is well aware that a real legal battle could cost over $100 million and a lot of time. If you can't afford it, take your crypto business out of the U.S. war zone.