SEC Files Lawsuit Against Crypto Exchange Kraken

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Kraken was sued by the Securities and Exchange Commission on Monday for allegedly operating illegally without registering as a securities exchange.

According to the SEC, Kraken has generated hundreds of millions of dollars since 2018 while operating without proper registration, depriving investors of necessary protections.

The lawsuit argues that many of the crypto assets available for trading on Kraken are considered securities, making it necessary for the exchange to register with the SEC.

However, Kraken has allegedly operated as a securities exchange, broker, dealer, and clearing agency without registering with federal regulators.

The SEC also claims that Kraken’s internal controls and recordkeeping practices are deficient, posing risks to its customers such as commingling customer funds with its own and using customer cash to pay operational expenses.

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