The SEC is suing Kraken, a leading cryptocurrency exchange, alleging its operation without registering as a securities exchange. Such a move has been generating lot of disturbances within crypto space amid the recent Binance-DoJ scenario.
Kraken’s Response to SEC’s Motion for Sumary Judgment.
Located in San Francisco, Kraken will strongly defend its modus operandi. The exchange argues that the regulation of cryptocurrency exchanges falls under the jurisdiction of Congress which has not yet made any laws on this issue. In its view, the suit is both legally wrong and ill considered. It has provided assurances to its huge customer population of more than 10 million customers that its operations and services will not be disturbed.
In this regard, the lawsuit concentrates on PAYWARD INC. and PAYWARD VENTURES INC., d/b/a kraken since 2018. SEC claims that Kraken carried out trades in crypto without observing appropriate securities laws and particularly mentioned poor internal controls, unfit records keeping, failure to address investor’s safety, and even mixing customers and companys assets.
Effect of this lawsuit in cryptocurrency world
This case forms a component of a wider strategy by the SEC chairman, Gary Gensler for regulating the crypto market under a traditional rule. This is akin to similar proceedings taken against some of the most notable crypto exchanges including Binance and Coinbase where the SEC are seeking to enforce the federal securities laws against these digital assets to establish a precedence in this industry.
Kragen is denying the SEC’s charges especially the “commingling” of funds that it claims applies only to earning fee payments. SEC hopes for financial penalties amounting thousands in dollars, profits return, and blocking measures from repeating those fraud schemes. For instance, the result of Kraken’s lawsuit would highly affect the legislation governing how cryptocurrency exchanges are regulated and place it as the focal point of an important debate concerning the position of legislative institutions within the expanding digital money market.