The U.S. Securities and Exchange Commission (SEC) has initiated a lawsuit against cryptocurrency exchange Kraken, accusing the exchange of violating securities laws. According to the SEC, Kraken has allegedly been operating as a broker, dealer, exchange, and clearing agency without registering with the SEC.
The SEC claims that Kraken's actions have exposed investors to significant risks, while generating billions of dollars in fees and trading revenue without complying with the requirements of U.S. securities laws. The lawsuit also alleges that Kraken's business practices, internal controls, and record keeping have introduced additional risks to investors, which would be prohibited for any properly registered securities intermediary.
In response, the SEC is seeking a judgement that permanently prohibits the defendants from violating securities laws and requests the disgorgement of ill-gotten gains. Additionally, the SEC aims to halt Kraken from operating as an unregistered exchange, broker, dealer, or clearing agency.