SEC Investigates Kraken Crypto Exchange for Providing Unregulated Assets

The U.S. is investigating Kraken, one of the biggest cryptocurrency exchanges by volume. Commission for Securities and Exchange (SEC). The cryptocurrency exchange has run into regulatory issues before. The Securities and Exchange Commission (SEC) has noticed cryptocurrency exchange Kraken. The agency is investigating to determine whether the claimed exchange provided unlicensed securities to American clients. The inquiry has reportedly reached a “advanced stage,” according to a Bloomberg article on Feb. 9. Although the specifics are still unclear, a resolution may be struck shortly.

“There are currently no tokens out there that are securities we're interested in listing”, said Kraken CEO Dave Ripley in September, noting that he didn't consider it necessary to establish Kraken as an exchange with the SEC since it doesn't offer securities.

Gary Gensler, the chairman of the SEC, has asserted numerous times that he views various cryptocurrencies other than Bitcoin as securities.

The offer of LBRY Credits (LBC) in the secondary market, even so, does not comprise a security, the SEC lately acknowledged during a Jan. 30 appeal process in the LBRY v. SEC case. The judge was convinced by an assertion from attorney John Deaton pointing out that that the tribunals have not presumed the underlying asset to be a security in previous instances.

The “Howey test” is frequently used by the regulators to evaluate what qualifies as a security. The 1946 SEC v. Howey decision, which established a standard for what activities are regarded as securities in the US, is where the term of the concept originated. It was determined that a transaction meets the criteria for a contractual obligation, and is consequently regarded as a security, where there is an interest in a shared firm whose earnings are only derived from the labor of others.

The dangers of dealing unregistered securities

Because securities really aren't subjected to a comparable amount of governmental monitoring as other financial products, they are regarded as having an increased chance. Chairman Gary Gensler urged crypto firms to file with the SEC, but Dave Ripley, the new CEO of Kraken, refused to comply. The biggest cryptocurrency exchange, Binance, has also experienced consequences for dealing in unlicensed commodities. It will be simpler to predict the conclusion once the inquiry is over and the SEC announces any findings. If the SEC discovers breaches of the securities laws, there may be fines, damages, or other sanctions.

On CoinMarketCap, Kraken is now the third-largest cryptocurrency exchange by volume. It goes without saying that the business does not look really good with the regulators' continuing investigation. Kraken recently concluded an OFAC lawsuit involving sanction breaches and received a $362,000 fine.

The bankruptcy of organizations like FTX caused the cryptocurrency market to experience a harsh winter the previous year. Many exchanges, notably Kraken, were impacted by this. A sudden 30% employee layoff at the company. The director of marketing at Kraken claimed that the decrease was unrelated to incidents like the FTX collapse.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!

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