SEC's lawsuit against Kraken alleges unregistered securities activities and commingling of funds.
Binance fined $4.3 billion, the CEO, Changpeng Zhao, stepped down and pled guilty to criminal charges.
It appears that once again, the Securities and Exchange Commission in the US has a major crypto exchange in its sights, as it has filed a lawsuit charging Kraken, the 10th biggest centralized crypto exchange by spot trading volume, with operating as an unregistered securities broker, dealer, exchange and clearing agency, and with commingling customer assets with its own corporate assets.
The SEC’s complaint makes mention of the Howey Test for determining whether assets are investment contracts and can be regarded as securities, and listed crypto assets that it has determined in previous cases (against Bittrex, Binance, and Coinbase) to be securities, specifically, the SEC mentioned: “Crypto assets trading under the symbols ADA, AXS, ALGO, ATOM, CHZ, COTI, DASH, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG, SAND, and SOL.”
Notably, there is no report of Ether (which trades under the ETH symbol), and it has been taken as a positive signal with regard to the various ETH ETF applications that are currently under consideration at the SEC, while it has also long been established that Bitcoin is classified as a commodity.
Kraken's CEO, Dave Ripley, stated, in a quick response to the SEC: “We strongly disagree with the SEC claims, stand firm in our view that we do not list securities, and plan to vigorously defend our position.”
We strongly disagree with the SEC claims, stand firm in our view that we do not list securities, and plan to vigorously defend our position.
As we have seen before, the SEC argues that @krakenfx should “come in and register” with the agency, when there is no clear path to…
And, Kraken has published an unambiguous blog post articulating its position, which begins by stating that Kraken denies accusations that it “operates as an unregistered securities exchange, broker, and clearing house”. It intends to contest these accusations in court, and in the meantime, will continue to operate its services as usual.
The post from Kraken stated: “The complaint against Kraken alleges no fraud, no market manipulation, no customer losses due to hacking or compromised security, and no breaches of fiduciary duty. It includes big dollar amounts but does not allege a single one of those dollars is missing or misused – no ponzi scheme, no failure to maintain adequate reserves, and no failure to preserve the identity of client funds 1:1. Indeed, none of these things would be true.”
From there, it hinges around the discussion of technical points, asserting that crypto assets are, in fact, not investment contracts, citing precedent from the SEC’s actions against Ripple Labs, in which The Federal Court for the Southern District of New York ruled against the SEC.
With regard to commingling funds, Kraken’s argument stated that: “the SEC cannot and does not allege that any customer funds are missing, or any loss has occurred. Nor does it allege that any loss will occur. The complaint itself concedes that this so-called 'commingling' is no more than Kraken spending fees it has already earned.”
Kraken also alleged that there is no mechanism by which crypto platforms can amiably register with the SEC, implying that the agency is not offering any viable routes to satisfy regulatory requirements, and added that: “The SEC has promulgated no rule describing how an order in a digital asset should be matched, no guidance on how a trade should be cleared, and articulated no standards for how to broker a digital asset transaction.”
Some of the points made by Kraken rework familiar arguments that have been taking place for some time about crypto in the US, revolving around whether or not crypto assets should be treated as securities falling within the remit of the SEC, and whether or not a practical way for crypto exchanges to register with the SEC even exists.
Relating to this ongoing disagreement, Kraken has received support from pro-crypto Senator Cynthia Lummis, who stated that the SEC “cannot continue ruling by enforcement.”
The SEC cannot continue ruling by enforcement. My statement on the Kraken lawsuit below: pic.twitter.com/J3qhzU624N
Kraken’s post also mentioned the role of Congress in questioning the SEC’s approach and draws attention to bi-partisan attempts to establish registration and oversight frameworks for crypto exchanges, while pointing to Kraken’s compliance with legal requirements in various regions around the world.
These developments have initially been received by some in the crypto space as potentially long-term bullish for the market, as they establish certainty, and come as the crypto sector is charging up for the possibility of ETFs launching during a Bitcoin halving year. There is also speculation that the ground has been cleared for crypto to integrate with traditional finance.
Furthermore, for Zhao to step down at Binance at around the same time as the criminal trial of the Founder of FTX, Sam Bankman-Fried, concluded, reinforces the sense of a curtain being drawn on a chaotic, meme-driven, and at times lawless period in crypto history, although what comes next, remains to be seen.
It appears that once again, the Securities and Exchange Commission in the US has a major crypto exchange in its sights, as it has filed a lawsuit charging Kraken, the 10th biggest centralized crypto exchange by spot trading volume, with operating as an unregistered securities broker, dealer, exchange and clearing agency, and with commingling customer assets with its own corporate assets.
The SEC’s complaint makes mention of the Howey Test for determining whether assets are investment contracts and can be regarded as securities, and listed crypto assets that it has determined in previous cases (against Bittrex, Binance, and Coinbase) to be securities, specifically, the SEC mentioned: “Crypto assets trading under the symbols ADA, AXS, ALGO, ATOM, CHZ, COTI, DASH, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG, SAND, and SOL.”
Notably, there is no report of Ether (which trades under the ETH symbol), and it has been taken as a positive signal with regard to the various ETH ETF applications that are currently under consideration at the SEC, while it has also long been established that Bitcoin is classified as a commodity.
Kraken's CEO, Dave Ripley, stated, in a quick response to the SEC: “We strongly disagree with the SEC claims, stand firm in our view that we do not list securities, and plan to vigorously defend our position.”
We strongly disagree with the SEC claims, stand firm in our view that we do not list securities, and plan to vigorously defend our position.
As we have seen before, the SEC argues that @krakenfx should “come in and register” with the agency, when there is no clear path to…
And, Kraken has published an unambiguous blog post articulating its position, which begins by stating that Kraken denies accusations that it “operates as an unregistered securities exchange, broker, and clearing house”. It intends to contest these accusations in court, and in the meantime, will continue to operate its services as usual.
The post from Kraken stated: “The complaint against Kraken alleges no fraud, no market manipulation, no customer losses due to hacking or compromised security, and no breaches of fiduciary duty. It includes big dollar amounts but does not allege a single one of those dollars is missing or misused – no ponzi scheme, no failure to maintain adequate reserves, and no failure to preserve the identity of client funds 1:1. Indeed, none of these things would be true.”
From there, it hinges around the discussion of technical points, asserting that crypto assets are, in fact, not investment contracts, citing precedent from the SEC’s actions against Ripple Labs, in which The Federal Court for the Southern District of New York ruled against the SEC.
With regard to commingling funds, Kraken’s argument stated that: “the SEC cannot and does not allege that any customer funds are missing, or any loss has occurred. Nor does it allege that any loss will occur. The complaint itself concedes that this so-called 'commingling' is no more than Kraken spending fees it has already earned.”
Kraken also alleged that there is no mechanism by which crypto platforms can amiably register with the SEC, implying that the agency is not offering any viable routes to satisfy regulatory requirements, and added that: “The SEC has promulgated no rule describing how an order in a digital asset should be matched, no guidance on how a trade should be cleared, and articulated no standards for how to broker a digital asset transaction.”
Some of the points made by Kraken rework familiar arguments that have been taking place for some time about crypto in the US, revolving around whether or not crypto assets should be treated as securities falling within the remit of the SEC, and whether or not a practical way for crypto exchanges to register with the SEC even exists.
Relating to this ongoing disagreement, Kraken has received support from pro-crypto Senator Cynthia Lummis, who stated that the SEC “cannot continue ruling by enforcement.”
The SEC cannot continue ruling by enforcement. My statement on the Kraken lawsuit below: pic.twitter.com/J3qhzU624N
Kraken’s post also mentioned the role of Congress in questioning the SEC’s approach and draws attention to bi-partisan attempts to establish registration and oversight frameworks for crypto exchanges, while pointing to Kraken’s compliance with legal requirements in various regions around the world.
These developments have initially been received by some in the crypto space as potentially long-term bullish for the market, as they establish certainty, and come as the crypto sector is charging up for the possibility of ETFs launching during a Bitcoin halving year. There is also speculation that the ground has been cleared for crypto to integrate with traditional finance.
Furthermore, for Zhao to step down at Binance at around the same time as the criminal trial of the Founder of FTX, Sam Bankman-Fried, concluded, reinforces the sense of a curtain being drawn on a chaotic, meme-driven, and at times lawless period in crypto history, although what comes next, remains to be seen.
Sam White is a writer and journalist from the UK who covers cryptocurrencies and web3, with a particular interest in NFTs and the crossover between art and finance. His work, on a wide variety of topics, has appeared on platforms including The Spectator, Vice and Hacker Noon.
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion explaining the impact of news on trading.
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion explaining the impact of news on trading.
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion explaining the impact of news on trading.
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion explaining the impact of news on trading.
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion explaining the impact of news on trading.
Lebowa Capital's Jimmy Moyaha at an FMLS:24 panel discussion explaining the impact of news on trading.
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets.
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets.
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets.
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets.
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets.
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets.
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets while participating in a panel discussion on "How to Trade the News."
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets while participating in a panel discussion on "How to Trade the News."
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets while participating in a panel discussion on "How to Trade the News."
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets while participating in a panel discussion on "How to Trade the News."
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets while participating in a panel discussion on "How to Trade the News."
Doo Prime's Fraser Nelson is explaining the challenges of liquidity in different markets while participating in a panel discussion on "How to Trade the News."
FMLS:24 exhibition venue is crowded on the second day.
FMLS:24 exhibition venue is crowded on the second day.
FMLS:24 exhibition venue is crowded on the second day.
FMLS:24 exhibition venue is crowded on the second day.
FMLS:24 exhibition venue is crowded on the second day.
FMLS:24 exhibition venue is crowded on the second day.
Panel Discussion on "Regulation, Trust, and the Future of Trading in Africa"
Panel Discussion on "Regulation, Trust, and the Future of Trading in Africa"
Panel Discussion on "Regulation, Trust, and the Future of Trading in Africa"
Panel Discussion on "Regulation, Trust, and the Future of Trading in Africa"
Panel Discussion on "Regulation, Trust, and the Future of Trading in Africa"
Panel Discussion on "Regulation, Trust, and the Future of Trading in Africa"
Experts discuss the topic "Regulation, Trust, and the Future of Trading in Africa" at FMLS:24
Experts discuss the topic "Regulation, Trust, and the Future of Trading in Africa" at FMLS:24
Experts discuss the topic "Regulation, Trust, and the Future of Trading in Africa" at FMLS:24
Experts discuss the topic "Regulation, Trust, and the Future of Trading in Africa" at FMLS:24
Experts discuss the topic "Regulation, Trust, and the Future of Trading in Africa" at FMLS:24
Experts discuss the topic "Regulation, Trust, and the Future of Trading in Africa" at FMLS:24