SEC Probes Kraken Over Violating Security Rules

Kraken, the-third biggest cryptocurrency exchange in the world, hasn’t stayed immune to the crypto ice age. It has found itself in the midst of a SEC probe for allegedly violating securities rules related to certain US client offerings, a person with insider knowledge told Bloomberg.

Settlement with SEC expected soon

The insider added that the probe had been going on for a while and might lead to a settlement soon. The crypto industry is under extreme pressure due to FTX’s collapse and other factors, so any legal action against Kraken could have dire consequences.

A settlement with the regulator could compel other crypto firms to make deals. SEC has been adamant that most of the assets being offered are actually securities and the products violate its rules.

The watchdog’s probes don’t always result in enforcement action. They can lead to individuals and companies facing penalties, such as hefty fines.

Kraken’s global trading volume is $650M a day

The exchange, which is based in San Francisco, boasts a daily trading volume of around $650 million, CoinMarketCap data show. It supports almost 200 cryptocurrencies, but the number available to US customers for trading is unclear. Clients of the exchange can also stake crypto to earn rewards.

At the end of 2022, Kraken reached a settlement with another state agency over accusations of disregarding US sanctions against Iran. Kraken agreed to pay almost half a million in the settlement: over $360,000 as a penalty and an investment of $100,000 in sanctions compliance.

Poloniex and Coinbase also in trouble

In 2021, Poloniex and the SEC reached a settlement over allegations that the former was running an unregistered crypto asset exchange. The omnipresent regulator is investigating Coinbase Global Inc. over asset listings. It defined a number of tokens listed on Coinbase as securities in a lawsuit involving insider trading.