The US Securities and Exchange Commission has filed a lawsuit against Kraken, accusing it of illegal securities trading.
According to Reuters, the SEC accused the platform of illegally operating as a stock exchange without first registering with the regulator.
The SEC said Payward Inc. and Payward Ventures Inc., operating under the name Kraken, have made hundreds of millions of dollars since 2018 by arranging the buying and selling of cryptocurrencies while “turning a blind eye” to securities laws designed to protect investors.
The cryptocurrency exchange was also accused of insufficient internal controls and poor record-keeping, reflected in part by commingling clients’ money with its own and paying operating expenses directly from clients’ accounts.
“Kraken’s choice to make malicious profits instead of protecting investors is something we see all too often in this space.”
SEC Enforcement Chief Gurbir Grewal
In a statement, Kraken said the SEC’s complaint acknowledges that any alleged “commingling” amounts to “nothing more than a fee for Kraken’s expenses that it has already earned.”
SEC vs. Binance
The SEC filed a similar customer asset pooling lawsuit against Binance in June. The regulator filed 13 charges against the crypto exchange and its founder, Changpeng Zhao.
Prior to this, in March, the Commodity Futures Trading Commission (CFTC) filed its lawsuit against the exchange, alleging that Binance and Zhao regularly violate the rules and facilitate block circumvention by US users, whom They are formally prohibited from accessing the global Binance and, in particular, from trading cryptocurrency futures.
