Kraken is Defending Against the SEC: Vigorously

In February 2023, Kraken reached a $30 million settlement with the U.S. Securities and Exchange Commission (SEC), which consequently forced the crypto exchange to terminate its staking service. Nine months later, the agency decided to kick off a new legal battle, but this time, Kraken vowed to stand its ground.

Kraken Defends its Position

On Tuesday, November 21, the securities watchdogs filed a legal lawsuit against US-based exchange Kraken, alleging it has operated as an unregistered broker and clearing house. Kraken was also accused of mixing customer and corporate funds, with an estimated $33 billion involved.

Kraken’s response came briefly within the day. According to the latest statement, Kraken ‘intends to vigorously defend’ its position in court. The exchange asserts that the SEC’s argument is ‘incorrect as a matter of law, false as a matter of fact, and disastrous as a matter of policy.’

One of the major points in the official statement is that the court had previously rejected similar claims. This fact, as believed by Kraken, is an apparent, strong reason that law will support Kraken’s stance. The firm stated that the SEC’s asking for compliance in a non-existent regime.

Despite the news, Kraken asserted that customer funds are safe and it will continue to provide services to its customers ‘without interruption.’ ‘We remain fully committed to our U.S. and global clients and partners,’ the firm stated. In addition, Kraken emphasized that the Congress will introduce bipartisan bills, which paves the way for clear crypto frameworks in the U.S.

Executives’ Words

The U.S. federal agency has expanded its crackdown on several entities within the industry since the beginning of this year. Following Binance and Coinbase, Kraken has become the next target. The three exchanges may be fierce competitors in the market, but in legal scene, they share a common plaintiff.

The SEC’s move sparked criticism from industry figures and communities. In response to the agency’s accusations, Kraken CEO David Ripley and co-founder Jesse Powell firmly asserted that the exchange didn’t offer securities. Powell additionally urged crypto firms to exit the U.S. market given the extreme regulatory scrutiny.

Previously, Coinbase’s CEO Brian Armstrong shared a similar opinion. Armstrong warned that the approach of the country’s policymakers would soon stiff away innovations. The leading figure reportedly sought other alternatives to relocate his business.