The US Securities and Exchange Commission (SEC) filed a lawsuit against Kraken, one of the sector’s leading crypto exchanges, on November 20, alleging various violations of federal securities laws, including pooling of funds. of users.
Although the SEC makes serious allegations against the exchange, the lawsuit also makes over 100 mentions of Solana and its native coin, SOL, and over 60 mentions of Cardano and its coin, ADA. The two are among the leading smart contract platforms whose coins rank in the top 10 by market capitalization.
Cardano and $ADA mentioned more than 60 times in the SEC’s lawsuit against Kraken.
Ask My Anything, aka AMA, also mentioned. #cardano pic.twitter.com/OtznBBl8eT
– St₳kΣ with pride
(@StakeWithPride) November 20, 2023
Solana and Cardano have been under increasing regulatory pressure of late, as the SEC alleges that ADA and SOL, like Algorand (ALGO) and Near Protocol (NEAR), as mentioned in lawsuits against Binance and Coinbase in June 2023, are unregistered securities.
Among its claims, the SEC claims that Kraken acted as an unregistered broker and clearinghouse in its handling of crypto asset transactions, and subsequently collected billions of dollars in fees without implementing measures to protect investors.
Specifically, the SEC claims that ADA and SOL are examples of illegally issued unregistered securities, even though “Kraken has long been warned that its role in the offer and sale of crypto assets as investment contracts made it subject to the “U.S. securities laws.”
By repeatedly naming major coins, including Solana and Cardano, in its complaint, the SEC appears to be building its case for greater authority over the cryptoassets it considers securities under the criteria of the Howey test. This aggressive stance has sparked fears of a regulatory “cloud over crypto innovation” in the US.
The lawsuit seeks to permanently ban the exchange from operating without SEC registration.
Kraken has since responded, accusing the SEC of regulating through enforcement, which “harms American consumers, slows innovation, and harms America’s competitiveness globally.”
