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In a recent statement, Jesse Powell, co-founder of the cryptocurrency Kraken exchange, affirmed the company’s steadfast commitment to a long-term strategy in the face of evolving challenges confronting the industry. This declaration follows the historic settlement between the U.S. Department of Justice and Binance, as well as a recent legal action initiated by the U.S. Securities and Exchange Commission against Kraken.
Powell, in a communication on X, noted that the current industry landscape appears to have gained a measure of fairness in the aftermath of the resolution with Binance. Which entails a substantial $4.3 billion fine. Reflecting on the past 12 months, Powell addressed lingering questions from shareholders. That regarding the swift pace of Kraken’s operations and the perceived absence of repercussions. He acknowledged the difficulty in sustaining confidence amid challenges to market share and regulatory actions seemingly targeting compliant entities.
Powell Advocates for Self-Regulation Amid Rising Threats to Cryptocurrency Industry Reputation
Acknowledging the persistent emergence of threats to the industry’s reputation, Powell recognized that each dubious operation provides governments with an opportunity to cast cryptocurrencies in a negative light and heighten regulatory scrutiny. Underlining the importance of self-regulation, Powell expressed skepticism about relying solely on external safeguards and urged industry participants to exercise vigilance.
Within the discourse, Powell made reference to other prominent players in the cryptocurrency space, including Coinbase and Ripple. Characterizing them as the “easy targets” of the U.S. Securities and Exchange Commission, conveniently situated for regulatory action. He suggested that pursuing offshore entities engaged in more egregious practices would necessitate considerable effort. Implying that regulatory interventions might not be solely driven by a commitment to consumer protection.
Kraken exchange Response to SEC Charges: A $30 Million Settlement and Warning
In February, Kraken’s parent entities faced charges from the Securities and Exchange Commission (SEC) for not registering the offer and sale of their crypto asset staking-as-a-service program. To settle the allegations, the parent companies opted to pay $30 million, covering “disgorgement, prejudgment interest, and civil penalties.”
Following the lawsuit on Monday, Jesse Powell posted separately, stating, “The message is unmistakable: $30 million buys you approximately 10 months before the SEC revisits to coerce further payments.” Powell highlighted that although $30 million can yield substantial legal outcomes. The SEC understands that a robust defense could incur costs exceeding $100 million and significant time. He advised crypto companies constrained by financial considerations to explore options outside the regulatory complexities of the U.S.
Also Read: Binance Settlement with the U.S. Government Timeline Actions
Kraken exchange Challenges SEC’s Classification of Products in Blog Post
In a blog post earlier this week, Kraken contested the SEC’s classification of its products as investment contracts. The company argued that the SEC’s stance was “legally flawed, factually inaccurate, and detrimental as a matter of policy.”
Kraken contended, “As acknowledged by most securities law experts, there is no supporting law for this position.” The company emphasized that the SEC’s claim lacked merit, asserting that there is no regulatory framework for investment contracts within the realms of exchanges, broker-dealers, or clearing agencies. Kraken maintained that the SEC is insisting on compliance with a regulatory framework that does not exist.
