SEC sues Kraken for operating unregistered platform

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Photo Source: Kraken (Blog)
As stated by the SEC’s legal complaint, “Kraken’s business practices, deficient internal controls, and inadequate recordkeeping present a range of additional risks that would also be prohibited for any properly registered securities intermediary.“

Months after suing Binance and Coinbase, the US Securities and Exchange Commission has filed a similar lawsuit against Kraken on charges of operating an unregistered exchange. 

In the court filing, the SEC accused Kraken of violating security laws by offering crypto services to US residents without registering with the regulatory agency. The SEC targeted Kraken’s recordkeeping practices, citing the San Francisco-based firm has frequently commingled over $33B worth of customer assets with its corporate holdings. 



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The regulatory agency also cited that at times, Kraken had accessed bank accounts with customer assets to pay operational expenses. Finally, it also drew attention to the fact that an independent auditor had discovered material errors in Kraken’s financial statements for 2020 and 2021.

In response, Kraken called the SEC’s lawsuit “disastrous.” Referring to Ripple’s (XRP) recent victory against the SEC, Kraken argued the accusations against the exchange are baseless, and assured the community that the regulator's complaint will not affect the exchange’s offerings. Kraken added,

“There is no such thing as an exchange, broker dealer, or clearing agency for investment contracts. The SEC is demanding compliance with a regime that doesn’t exist.”
Written by
Author's profile picture

Ayush Pande

Ayush Pande is a hardware, gaming, and crypto writer based in India. He's a tech enthusiast who's fascinated by the potential of blockchain technology.

Connect with Ayush on LinkedIn
As stated by the SEC’s legal complaint, “Kraken’s business practices, deficient internal controls, and inadequate recordkeeping present a range of additional risks that would also be prohibited for any properly registered securities intermediary.“

Months after suing Binance and Coinbase, the US Securities and Exchange Commission has filed a similar lawsuit against Kraken on charges of operating an unregistered exchange. 

In the court filing, the SEC accused Kraken of violating security laws by offering crypto services to US residents without registering with the regulatory agency. The SEC targeted Kraken’s recordkeeping practices, citing the San Francisco-based firm has frequently commingled over $33B worth of customer assets with its corporate holdings. 



Get Our Free Newsletter

Subscribe to our newsletter to get tips, our favorite services, and the best deals on Bitcompare-approved picks sent to your inbox


The regulatory agency also cited that at times, Kraken had accessed bank accounts with customer assets to pay operational expenses. Finally, it also drew attention to the fact that an independent auditor had discovered material errors in Kraken’s financial statements for 2020 and 2021.

In response, Kraken called the SEC’s lawsuit “disastrous.” Referring to Ripple’s (XRP) recent victory against the SEC, Kraken argued the accusations against the exchange are baseless, and assured the community that the regulator's complaint will not affect the exchange’s offerings. Kraken added,

“There is no such thing as an exchange, broker dealer, or clearing agency for investment contracts. The SEC is demanding compliance with a regime that doesn’t exist.”
Written by
Author's profile picture

Ayush Pande

Ayush Pande is a hardware, gaming, and crypto writer based in India. He's a tech enthusiast who's fascinated by the potential of blockchain technology.

Connect with Ayush on LinkedIn
Written by
Ayush Pande