-
Kraken
has
joined
Coinbase
and
Binance
as
targets
of
Securities
and
Exchange
Commission
accusations
that
the
companies
are
operating
without
properly
registering
as
securities
businesses
in
the
U.S. -
The
SEC
highlighted
a
long
list
of
tokens
it
considers
securities
that
Kraken
traded,
each
of
which
has
now
made
multiple
appearances
in
SEC
enforcement
actions.
Crypto
exchange
Kraken
commingled
customer
and
corporate
funds
while
operating
as
an
unregistered
broker,
clearing
agency
and
dealer,
the
U.S.
Securities
and
Exchange
Commission
(SEC)
alleged
in
a
new
lawsuit
Monday.
The
federal
regulator
claimed
that
the
San
Francisco-based
company
violated
federal
securities
laws
in
a
repeat
of
its
suits
against
other
crypto
trading
platforms.
Unique
to
Monday’s
lawsuit
are
claims
that
Kraken
created
a
“significant
risk”
by
commingling
up
to
$33
billion
in
customer
crypto
with
its
own
corporate
assets,
the
regulator
said,
quoting
Kraken’s
independent
auditor.
“Similarly,
Kraken
has
held
at
times
more
than
$5
billion
worth
of
its
customers’
cash,
and
it
also
commingles
some
of
its
customers’
cash
with
some
of
its
own,”
the
suit
said.
“In
fact,
Kraken
has
at
times
paid
operational
expenses
directly
from
bank
accounts
that
hold
customer
cash.”
The
SEC
claims
that
Kraken
simultaneously
operates
an
unregistered
broker,
clearinghouse
and
exchange
echoes
its
complaints
against
Binance
and
Coinbase,
two
exchanges
the
agency
sued
earlier
this
year.
Those
suits
are
continuing.
The
SEC
previously
settled
similar
allegations
against
Bittrex’s
now-shuttered
U.S.
wing.
The
federal
regulator,
as
it
has
with
those
previous
suits,
listed
a
number
of
tokens
it
deemed
to
be
unregistered
securities,
including
the
Algorand
token
(ALGO),
Polygon’s
MATIC
and
NEAR.
According
to
the
suit,
Kraken
took
a
direct
role
in
promoting
these
tokens
to
the
investing
public.
The
SEC
filing
asks
to
permanently
ban
Kraken
from
operating
as
an
unregistered
exchange.
The
agency
says
it’s
also
pursuing
a
fine
and
for
Kraken
to
give
back
ill-gotten
gains.
“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,”
Kraken
said
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.
And
despite
opposition
from
lawmakers,
the
SEC
continues
to
pursue
legal
action
against
these
crypto
exchanges.
For
years,
we
have
advocated
for
effective
U.S.
market
regulation
that
addresses
the
unique
risks
and
benefits
which
crypto
presents
to
all
individuals.
We
believe
Congressional
action
is
the
most
appropriate
path
to
resolving
the
lack
of
regulatory
clarity
in
the
U.S.
It
is
disappointing
to
see
the
SEC
continue
down
its
path
of
regulation
by
enforcement,
which
harms
American
consumers,
stunts
innovation
and
damages
U.S.
competitiveness
globally.”
The
exchange
also
published
a
blog
post
outlining
its
position.
The
regulator
settled
charges
tied
to
Kraken’s
staking
services
earlier
this
year.
UPDATE
(Nov.
20,
2023,
23:05
UTC):
Adds
additional
detail
and
links.
UPDATE
(Nov.
21,
2023,
00:29
UTC):
Adds
a
statement
from
Kraken.