Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => Crypto Exchanges => Kraken => Topic started by: Husires on March 03, 2024, 12:23:53 PM
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In February 2023, Kraken agreed to settle with the SEC in the amount of $30 million in the staking program case, but not many months had passed since that settlement until the SEC filed a new lawsuit, but this time their argument is based on the registration that Kraken operates as a securities exchange, broker, dealer, and non-profit clearing agency. Licensed because cryptocurrency tokens are called “investment contracts”
Today, we filed a motion asking the Court to dismiss the SEC’s lawsuit against Kraken. The SEC’s Complaint did not claim any fraud or consumer harm whatsoever. It made only a registration-based argument that Kraken operates as an unlicensed securities exchange, broker, dealer and clearing agency because crypto tokens are so-called “investment contracts.” Even taking all of the SEC’s allegations in the Complaint as true – and many are not – its argument is flawed as a matter of law.
The SEC never points to any “contract” between buyers on Kraken and token issuers, so there can’t be an “investment contract”
None of the assets in the SEC’s Complaint are investment contracts under the law.
https://blog.kraken.com/news/sec-kraken-dismiss
The repercussions of this lawsuit extend beyond the SEC and Kraken due to the lack of a clear regulatory framework. However, the SEC is still pursuing and stopping most cryptocurrency exchanges.
With no precedent, the final outcome of this legal battle may be relied upon in all future complaints.
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None of the assets in the SEC’s Complaint are investment contracts under the law.
https://blog.kraken.com/news/sec-kraken-dismiss
Yeah, TLDR from Kraken point in that statement
The tokens we sell on our platform are free to purchase and we should not be liable for anything, it's like selling a car or a watch (at which point they ignore all come with a contract and a guarantee) and not care about the value or how much that thing will run! Or put otherwise, they want to not be held responsible for any coin they list on their platform and blame eveything on people not doing their due diligence check, but not a word on the cash made from that.
Also, I see they've chosen to ignore the issue of using clients funds as their own with no accountability, FTX style.
Kraken was and maybe still is one of the best exchnges out there and I always preferred them against more hyped names but on this issue they are totally in the wrong.
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Also, I see they've chosen to ignore the issue of using clients funds as their own with no accountability, FTX style.
Banks and companies listed on the stock exchange do this. It is difficult to verify that customer funds are not being misused or that platforms can succeed without using those funds. The only solution is to have something similar to the FDIC in place so that customer funds can be guaranteed for up to 2 Bitcoin. then I do not expect a person to deposit more than 2 Bitcoin and want to trade daily, especially with more regulated options such as ETFs.
Kraken was and maybe still is one of the best exchnges out there and I always preferred them against more hyped names but on this issue they are totally in the wrong.
Yes, but it looks like the SEC won't let them without more fines.
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In February 2023, Kraken agreed to settle with the SEC in the amount of $30 million in the staking program case, but not many months had passed since that settlement until the SEC filed a new lawsuit, but this time their argument is based on the registration that Kraken operates as a securities exchange, broker, dealer, and non-profit clearing agency. Licensed because cryptocurrency tokens are called “investment contracts”
Once you make a deal and settle with government there is no more coming back, they are going to continue until they close the business or force it to shutdown.
I respect Kraken for trying to resist for so long, especially since they are registered in United States, but I think it would be much smarter if they move to some better crypto friendly location.
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The only solution is to have something similar to the FDIC in place so that customer funds can be guaranteed for up to 2 Bitcoin. then I do not expect a person to deposit more than 2 Bitcoin and want to trade daily, especially with more regulated options such as ETFs.
No , the solution is exactly the same as the current law, where banks are forced to keep clients money out of their personal investments.
Funny thing, you know who implemented this law and who run away from it?
It was Japan, and because of this no FTX funds in Japan's FTX branch were lost, and the guy running away from Japan and losing their licenses there was no other than CZ and Binance!
Once you make a deal and settle with government there is no more coming back, they are going to continue until they close the business or force it to shutdown.
I respect Kraken for trying to resist for so long, especially since they are registered in United States, but I think it would be much smarter if they move to some better crypto friendly location.
Both Kraken and Coinbase promoted the sale of token, sold them directly earning commissions, earned commissions from the trading fees, used their own accounts and customers accounts when settling trades, so they did basically eveything a a broker and clearing agency would do but they didn't register as one, and obviously, since they claim they are not one they also claim they are not liable for anything that goes wrong!
They will not go anywhere, they will pay their fine, register as the law requires, and keep on doing business like previously but lawfully, Coinbase has already done so and is right now fighting in courts just to lower the fines, nothing else!
Neither Kraken nor Coinbase are dumb enough to flee the US, that's where the money is, look how Binance tires no matter what to keep a pie of that US market even if it CZ himself lands in jail!
It's not about "resisting" it's about fleecing your customers beyond the law!
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Both Kraken and Coinbase promoted the sale of token, sold them directly earning commissions, earned commissions from the trading fees, used their own accounts and customers accounts when settling trades, so they did basically eveything a a broker and clearing agency would do but they didn't register as one, and obviously, since they claim they are not one they also claim they are not liable for anything that goes wrong!
So did Vitalik Buterin with ethereum, Solana with the jailed FTX guy, Cardano with Charles Hoskinson, and it is the similar situation with most of the other altcoins :P
I am not defending any centralized exchanges but it was reality with most tokens and ICO projects.
In few years most of the projects that got sold like this will not exist anymore.