SEC sets its sights on Kraken — Major crypto exchange under investigation

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  • The United States Securities and Exchange Commission (SEC) is looking into allegations that Kraken violated securities regulations and has opened an inquiry against the company.
  • Investigations that are carried out by the SEC may result in different forms of punishments, including monetary fines, being imposed on organizations and people.

Kraken, a prominent cryptocurrency exchange, has come under investigation by the US Securities and Exchange Commission (SEC) over allegations of breaking securities rules.

The SEC is examining whether the exchange offered unregistered securities to American clients, and the probe is said to be in an advanced stage. The identity of the tokens or offerings in question remains unknown.

Significance of a Kraken probe on the crypto industry

Following the demise of FTX at the end of last year, authorities’ attention has been focused more intently on the cryptocurrency business. The SEC has argued that most tokens being traded are securities and should be subject to its laws, so any settlement with the agency may put pressure on other crypto businesses to negotiate arrangements with the regulator.

The purpose of SEC Chairman Gary Gensler’s crypto regulation efforts into 2023 is to ensure that cryptocurrency exchanges and lending platforms are in compliance with applicable laws. This might take place either by having companies register with the SEC or by having enforcement proceedings taken against them.

Kraken’s CEO, Dave Ripley, has said that the company is exempt from SEC exchange registration requirements since it does not deal in securities. In contrast, Gary Gensler has declared on many occasions that he views all cryptocurrencies other than Bitcoin to be securities.

The potential outcomes of the investigation

Observers of the sector are waiting with bated breath for the conclusion of the investigation into Kraken that was conducted by the SEC. Investigations conducted by the SEC may not necessarily end in enforcement action; nonetheless, they can lead to companies and individuals being fined and subjected to various types of sanctions.

Kraken has not been charged explicitly by the SEC of marketing unregistered securities, but if proven guilty, the exchange might face severe fines.

Kraken has over $650 million in daily trading volume, making it the third-biggest cryptocurrency exchange in the world. Although more than 185 digital currencies are supported by the corporation, it is not known how many are accessible to customers in the United States.

The Office of Foreign Assets Control of the US Treasury and the exchange negotiated a settlement regarding claims of the exchange breaking US sanctions against Iran late last year, although this is unrelated.

As part of the agreement, the corporation has committed to making a payment of somewhat more than $360,000 in addition to an investment of $100,000 in sanctions compliance.

One of Kraken’s rivals, Coinbase, is now the subject of an investigation by the Securities and Exchange Commission (SEC) about its token listings.

Although the agency has not specifically accused Coinbase of marketing unregistered securities, in a complaint against a former Coinbase employee and two individuals for insider trading, it did designate certain tokens available on the exchange as securities.

Overall, the SEC investigation into Kraken is a big deal for the cryptocurrency sector since the government intends to force crypto exchanges and lending platforms to comply with the law.

The decision in the investigation might set a precedent for future regulatory proceedings and have far-reaching consequences for the industry.

  • Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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