Kenne Michael 
Kraken was cited by the US Securities and Exchange Commission (SEC) for operating its crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency in yet another anti-crypto enforcement action.
However, the crypto exchange disagreed with the complaint and declared its intention to “vigorously defend” its stance in court.
The United States agency complained, alleging that Kraken unlawfully generated hundreds of millions of dollars in its crypto trading business over the past five years and potentially earlier.
While the agency’s view of crypto buying and selling as an act of crypto asset’ securities’ has long been contested, the SEC continues to enforce the law based on the same ambiguity.
The Commission stated in its complaint dated November 20, 2023,
“The SEC alleges that Kraken intertwines the traditional services of an exchange, broker, dealer, and clearing agency without having registered any of those functions with the Commission as required by law.”
The SEC alleged in its complaint that Kraken improperly protected investors by operating as an unregistered entity, thereby denying them substantial safeguards such as SEC inspections, recordkeeping obligations, and protections against conflicts of interest.
Moreover, the US SEC contended that the crypto exchange had mixed operational funds with customer money and crypto assets.
According to the complaint, Kraken allegedly deducted customer cash from accounts with operational expenses.
It added that these observations had been identified by the exchange’s auditor as “a significant risk of loss” for its clients.
The exchange issued a statement denying the allegations and committed to contesting them in court, potentially setting the stage for a protracted crypto lawsuit against the SEC.
