Crypto Exchange Kraken Faces SEC Lawsuit, Co-Founder Urges Industry Exodus

Kraken Co-Founder Warns Crypto Firms: Exit 'U.S. Warzone' Amid SEC Disputes

In a post on X (formerly Twitter) on November 21, Powell labelled the SEC as the "USA's top decel," employing a term from the tech industry that implies hindrance to progress. Powell asserted that the SEC was unsatisfied with the $30 million settlement imposed on Kraken in February.

In a subsequent post, Powell conveyed a clear message to Kraken and other crypto firms, cautioning them to exit what he referred to as the "U.S. warzone" to avoid engaging in expensive legal battles. The SEC had previously accused Kraken of "failing to register the offer and sale of their crypto asset staking-as-a-service program." As part of the settlement, Kraken agreed to pay $30 million and cease providing crypto-staking products and services to U.S. customers.

SEC Accuses Kraken of Securities Violations; Exchange Defends Against Allegations

Powell's pointed comments followed a November 20 lawsuit from the SEC, which alleged several securities law violations by Kraken. The charges included failure to register as a securities broker and the commingling of customer and corporate funds. Kraken's spokesperson refuted claims of listing unregistered securities, expressing disappointment in the lawsuit and vowing to defend the company's position in court.

In a subsequent November 20 blog post, Kraken countered the SEC's commingling accusations, stating that it was simply utilizing fees it had already earned and clarifying that the regulator did not allege any missing user funds.