Table of Contents:

· SEC accuses Kraken of violating federal securities laws, causing "significant risk"

· Kraken: The law is on our side, SEC's accusations are baseless and illegal

· Binance and Coinbase also face similar accusations

Today, the U.S. Securities and Exchange Commission (SEC) once again sparked discussions within the cryptocurrency industry regarding regulatory issues.

11 月 21 日, Kraken officially responded to the SEC's allegations on social media, stating that Kraken does not agree with the SEC's claims and plans to vigorously defend its position: "The news of the allegations has no impact on the products provided by Kraken, and we will continue to provide uninterrupted service to our customers."

SEC accuses Kraken of violating federal securities laws, causing "significant risk"

This Kraken's response is aimed at the SEC's latest allegations yesterday.

November 20th, the SEC accused the cryptocurrency exchange Kraken of mixing customer funds with company funds and operating as an unregistered broker-dealer, clearing agency, and exchange.

SEC alleges that Kraken violated federal securities laws and cited Kraken's independent audit report, stating that Kraken mixed up to $33 billion of customer cryptocurrency with corporate assets, causing "significant risk".

The lawsuit also mentioned that Kraken sometimes holds customer cash worth more than $5 billion and mixes some customers' cash with the company's own cash; sometimes it directly uses bank accounts holding customer cash to pay for operating expenses, which "creates significant risk."

Kraken: The law is on our side, SEC's accusations are baseless and illegal

Regarding this, Kraken quickly responded on November 20th with a blog post and subsequently made a strong counterattack on social media, stating that "the law is on our side" and that the SEC's accusations are "baseless" and also "illegal".

In an article published by Kraken, three points were raised. Firstly, the SEC did not make accusations against Kraken for any actual illegal activities (such as fraud, money laundering, market manipulation, Ponzi schemes, etc.), but rather made accusations against Kraken for "commingling of funds", which is baseless and fabricated.

This accusation is all incorrect. Legally, it is incorrect; factually, it is wrong; and policy-wise, it is disastrous.

SEC cannot and will not claim any loss or damage to customer funds. It also does not claim that any loss will occur. The accusation itself acknowledges that this so-called 'mixing' is nothing more than Kraken's earned payout fees.

Secondly, Kraken pointed out that the SEC had hoped to define the buying and selling of digital assets on trading platforms as securities transactions. However, the Southern District of New York Federal Court disagreed and also ruled that the SEC had completely failed to meet the relevant legal tests. Kraken also stated that the court believed that the SEC's legal theory was at odds with the "economic reality" of such transactions. Therefore, the SEC's lawsuit against Kraken will also fail.

Finally, Kraken pointed out that the SEC has not issued any rules describing how to match orders for digital assets, no guidelines on how to settle trades, and no standards for conducting digital asset transactions.

This accusation is baseless. The SEC is asking us to comply with a system that does not exist.

Meanwhile, Kraken has stated that both parties have questioned the SEC's "enforcement-based regulation" approach and asked why the SEC seems to be less concerned with "compliance and customer protection" in its actions against cryptocurrency companies, and more focused on "maximizing publicity and political impact." Others believe that the SEC's strategy "has not protected the public."

"In fact, this lawsuit is of no help in protecting the public. Like previous accusations, its allegations are actually incorrect, violate the law, and are an erroneous way of implementing US policy."

Binance and Coinbase both face similar accusations

According to BlockBeats observation, Kraken's article refers to "previous allegations", which refers to SEC's earlier lawsuit against Binance and Coinbase for the same reasons this year.

On June 5th of this year, the SEC accused cryptocurrency exchange Binance and its CEO "CZ" of violating federal securities laws by promoting cryptocurrency asset securities to US investors and conducting multiple unregistered issuances and sales of cryptocurrency asset securities and other investment plans on unregistered online trading platforms at Binance.com and Binance.US.

Related reading: "Binance responds to SEC allegations: platform funds are safe, SEC's tough regulation will make the situation more complex".

Meanwhile, the US cryptocurrency exchange Coinbase has also faced similar accusations. On June 6th of this year, the SEC fired again, suing Coinbase for violating US securities trading rules in the New York Federal Court.

Compared to Binance's calm response to SEC's accusations, Coinbase's attitude towards SEC appears to be very tough. As the key figure of Coinbase facing SEC, Coinbase's Chief Legal Officer Paul Grewal emphasized on social media that "he is willing to fight with SEC to the Supreme Court, and Coinbase will definitely win the lawsuit". At the same time, he also counter-sued SEC, which seems to be a winning move to reverse the situation.

Related reading: "In fact, Coinbase sued the SEC first."

Coincidentally, on November 21st, the day after Kraken responded to the SEC's allegations in a lengthy article, according to Bloomberg, the US Department of Justice is seeking over $4 billion in fines from Binance as part of a proposed settlement for a years-long investigation.

Three informed sources said that the agreement aims to achieve a balance that allows Binance to continue operating without risking a collapse, thereby reducing the negative impact on the market and cryptocurrency holders.

BlockBeats observed that in recent years, more and more participants in the cryptocurrency industry are no longer "fearful of SEC's changes in color", but instead are questioning and even strongly resisting SEC's accusations. This change is not only due to SEC's own problems, but may also be related to the cryptocurrency industry's increasing influence and its move towards a more compliant and healthy development path.

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia