Kraken co-founder Jesse Powell has strongly criticized the U.S. Securities and Exchange Commission (SEC) following the regulatory body's lawsuit against the cryptocurrency exchange for alleged breaches of securities laws. In a post on November 21, Powell expressed dissatisfaction with the $30 million settlement fee Kraken paid to the SEC in February. He emphasized that the SEC's message to Kraken and other crypto firms was unmistakable, cautioning them to exit the "American war zone" to evade costly legal confrontations.
Powell highlighted that while $30 million may offer a temporary respite, it only postpones the inevitable encounter with the SEC. He mentioned that legal battles could escalate to cost more than $100 million, along with consuming significant time. Consequently, Powell advised crypto companies unable to afford such expenditures to withdraw from the U.S. market to avoid entanglements with regulatory authorities.
The SEC had previously accused Kraken of not registering its crypto asset staking service, considering it a violation. As part of the settlement, Kraken consented to pay a $30 million fine and discontinue offering cryptocurrency staking services to U.S. customers. Powell's remarks surfaced after the SEC filed a lawsuit against Kraken on November 20, alleging multiple securities law breaches.
Among the SEC's accusations were Kraken's failure to register as a securities broker and the alleged mingling of client and company funds. A spokesperson for Kraken refuted claims of listing unregistered securities, deeming the lawsuit disappointing. The exchange pledged to mount a robust defense against the allegations in court.
In a subsequent blog post on November 20, Kraken defended its stance, asserting that the SEC's charges were merely incurred expenses and clarified that the regulator did not assert any user fund losses tied to the allegations.
