SEC sues crypto company Kraken for operating unregistered exchange
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The U.S. Securities and Exchange Commission on Monday filed charges against crypto company Kraken for operating what it says is an unregistered securities exchange, clearing agency and broker.
Why it matters: This is the latest high-profile move by the regulatory agency in its quest to reign in what it sees as crypto companies running amok with securities law.
- The SEC has already levied charges against exchanges Coinbase and Binance.
What they're saying: "We disagree with the SEC's complaint against Kraken, stand firm in our view that we do not list securities and plan to vigorously defend our position," said Marco Santori, Kraken's chief legal officer, in a statement.
- "The SEC has repeatedly challenged crypto exchanges to come in and register without a single law supporting their position and no clear path to registration."
Details: The SEC lists 16 tokens available for trading on Kraken's platform that it considers to be securities, some of which are included in the Coinbase and Binance suits.
Meanwhile, the agency also accused Kraken of having inadequate internal controls and poor recordkeeping practices.
- "Kraken commingles its customers' money with its own, including paying operational expenses directly from accounts that hold customer cash," the complaint alleges.
- "Kraken also allegedly commingles its customers' crypto assets with its own, creating what its own auditor had identified as 'a significant risk of loss' to its customers."
Flashback: Earlier this year, Kraken settled charges with the SEC over its staking services, agreeing to suspend it and to pay a $30 million in civil penalty.
Editor's note: This article has been updated with comment from Kraken chief legal officer Marco Santori.
Crystal Kim contributed reporting
