SEC Files Another Lawsuit Against Kraken Judge Urged to Permanently Prohibit Kraken from Operating Unregistered Exchange

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SEC Sues Kraken Again
Response from Kraken Exchange
The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the cryptocurrency exchange Kraken again last night. The regulatory agency accuses Kraken’s parent company, Payward Ventures and Payward Trading, of violating securities laws by operating an unregistered securities exchange, broker-dealer, dealer, and clearing agency.
Furthermore, the SEC claims in the complaint that Kraken’s business practices, internal controls, and record-keeping pose additional risks to investors. The SEC stated in the complaint:
On the other hand, the SEC also noted that Kraken holds over $33 billion in customer “crypto assets,” but it commingles these crypto assets with its own assets, which its independent auditor identified as a significant risk to customers in the audit plan. Similarly, Kraken holds over $5 billion in customer “cash assets,” and the exchange also mixes some customers’ cash with its own cash, sometimes even directly withdrawing funds from bank accounts where customer cash is held to pay operating expenses.
The SEC seeks a permanent injunction to prohibit Kraken from continuing to operate as an “unregistered exchange” and demands the return of illegal gains.
In February of this year, the SEC sued Kraken for providing “crypto asset staking services” without registration. Ultimately, Kraken chose to settle and paid a total of $30 million in disgorgement and civil penalties. However, this time, the SEC’s enforcement action has more serious implications for the exchange’s operations, so Kraken will not concede but intends to actively defend itself in court.
In a statement released by the Kraken exchange recently, it stated:
Additionally, Kraken added that this event will not currently impact the platform’s products and services, and the exchange will continue to provide services to customers without interruption.