The U.S. Securities and Exchange Commission has sued crypto exchange Kraken over alleged securities laws violations.
The SEC says Kraken “simultaneously acted as a broker, dealer, exchange and clearing agency” without due registration.
The SEC accuses Kraken of creating “risk for investors and taken in billions of dollars in fees and trading revenue from investors without adhering to or even recognizing the requirements of the U.S. securities laws that are designed to protect investors.”
The SEC also accuses the crypto exchange of holding “customer crypto assets valued at more than $33 billion, but it has commingled these crypto assets with its own, creating what its independent auditor had identified in its audit plan as “a significant risk of loss” to its customers.”
“Similarly, Kraken has held at times more than $5 billion worth of its customers’ cash, and it also commingles some of its customers’ cash with some of its own.”
The SEC sued Kraken’s parent firms Payward Ventures and Payward Trading in February of this year for “failing to register the offer and sale of their crypto asset staking-as-a-service program.”
Kraken’s parent entities agreed to stop the crypto staking-as-a-service program and pay $30 million in “disgorgement, prejudgment interest and civil penalties.”