The Crypto Roundup: 21 November 2023 | CryptoCompare.com

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit accusing San Francisco-based cryptocurrency exchange Kraken of breaking federal securities laws by operating without proper registration as a broker, clearing agency and dealer.

The SEC also accused Kraken of creating a “significant risk” by mixing its own corporate assets with up to $33 billion worth of customer crypto, citing Kraken’s independent auditor.

Per the lawsuit, Kraken at times held “more than $5 billion worth of its customers’ cash, and it also commingles some of its customers’ cash with some of its own.” It adds that Kraken has “at times paid operational expenses directly from bank accounts that hold customer cash.”

The SEC also named several tokens that it considered to be unregistered securities, such as Algorand’s ALGO, Polygon’s MATIC and NEAR, and said that Kraken actively marketed these tokens to the investors. The filing asks to permanently ban Kraken from operating as an unregistered exchange.

Kraken has responded that it disagrees with the SEC’s complaint and stands firm in its view “that we do not list securities and plan to vigorously defend our position.”

The company criticizes the SEC for urging crypto exchanges to register without clear legal backing or guidelines for registration and noted it has long advocated for effective U.S. market regulation tailored to the unique aspects of cryptocurrencies, favoring Congressional action for regulatory clarity. In a blog post, Kraken says that the SEC’s complaint “concedes that this so-called “commingling” is no more than Kraken spending fees it has already earned.”

Kraken added it views the SEC’s approach of regulation through enforcement as harmful to consumers, innovation, and the global competitiveness of the U.S. Earlier this year, the SEC settled charges tied to Kraken’s staking service.

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• Source: https://www.cryptocompare.com/email-updates/daily/2023/nov/21/