Kraken to Challenge SEC Lawsuit Amid Reactions from Crypto Community and Regulatory Allies
Summary:
The United States Securities and Exchange Commission (SEC) has filed a lawsuit against crypto exchange, Kraken, alleging unlicensed operations and mixing of customer and company funds. The news has drawn swift and vocal reactions from the crypto community, including Kraken's executives and legal experts. Kraken's CEO, Dave Ripley, strongly disagrees with the SEC's claims and intends to defend the company robustly. The legal uncertainties surrounding cryptocurrencies in the U.S. have attracted criticism, especially given the SEC's stern stance. However, some regulatory figures like U.S. Senator Cynthia Lummis and House Representative Tom Emmer are advocating for the crypto industry.
The cryptocurrency world has been vocal in its response to a recent United States regulatory action; a lawsuit levelled at crypto exchange, Kraken, by the Securities and Exchange Commission (SEC). Filed on November 20, the lawsuit accuses Kraken of operating as an unlicensed exchange, broker, dealer, and clearing agency, alleging that the company blends customer funds with its own. The reaction from the crypto sphere, Kraken's leadership, and notable attorneys has been swift and outspoken, following the breaking of this news.
On the day of the announcement, Founder of Kraken, Jesse Powell, compared the action to an "attack on America" and dubbed the SEC the top enemy of the U.S., cautioning other firms to shift away from the country. On the following day, the incumbent CEO of Kraken, Dave Ripley, disagreed strongly with the SEC's accusations and declared an intent to ardently challenge them.
As part of his statements, Ripley declared that the company firmly denies the claims made by the SEC, asserting that they do not list securities. He also stated that the nebulous nature of U.S. regulations would only find resolution through action from Congress. He pledged Kraken's support to efforts aimed at introducing clarity into the tumultuous America's crypto legal scenario.
On the same issue, John Deaton, a seasoned cryptocurrency attorney, criticized Gary Gensler, the present chairman of the SEC, calling him a reprehensible and dishonorable regulator. Deaton expressed his views about Kraken's choice to pay $30 million to the SEC in a settlement earlier this year. He stated that Gensler demonstrated a lack of concern for all involved parties – from employees to investors – and hoped to see the chairman's downfall soon.
Commenting on the prospects of Kraken's success against the SEC in a second court round, Carlo D'Angelo, a cryptocurrency defense attorney, posted on X, a former Twitter platform, opining that the odds may not favor the SEC. D'Angelo pointed out that a similar defense put up by the SEC had failed previously, and the judge in the Kraken case would likely consider these precedents to avoid an appeal reversal.
However, the SEC's stern stance against cryptocurrencies, especially in the presence of unformulated legal guidelines for crypto companies and exchanges handling digital assets, has not been well received. The regulatory agency, though faced with backlash, does have some allies, including U.S. Senator Cynthia Lummis, who argued against the SEC's enforcement-based rule, stating crypto companies' attempts to seek guidance from the SEC have so far been unsuccessful. U.S. House Representative Tom Emmer also supports the industry, proposing to cut off funding for the SEC's mission against cryptocurrencies.
Published At
11/21/2023 10:15:58 AM
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