YEREVAN (CoinChapter.com) — Jesse Powell, the co-founder of crypto exchange Kraken, has strongly criticized the Securities and Exchange Commission (SEC) following the lawsuit against his platform for alleged securities law violations.
SEC Lawsuit on Kraken is “Decel” — Powell
Powell referred to the SEC and its chief Gary Gensler as “USA’s top decel.” Decel is slang for decelerators, used for people who hinder progress.
The executive expressed dissatisfaction with the SEC’s actions, saying that Kraken had already paid the US securities watchdog $30 million in settlements in February 2023. As a result, they should not have been brought under fresh charges.
Powell also warned other crypto companies, advising them to leave the US to avoid expensive legal battles with the SEC.
He indicated that the SEC’s approach, which he views as excessive, could lead to legal costs exceeding $100 million. Therefore, companies unable to afford such expenses should consider operating outside the US.
As mentioned, the remarks came after the SEC filed a lawsuit against Kraken. Again.
SEC Notoriously Regulating Crypto “By Enforcement”
The SEC has charged Payward Inc. and Payward Ventures Inc., collectively known as Kraken, with operating an unregistered securities exchange, broker, dealer, and clearing agency.
This lawsuit follows Kraken’s previous agreement to discontinue its unregistered offer and sale of crypto asset staking-as-a-service programs, for which Kraken agreed to pay a $30 million settlement to the SEC in February 2023.
The SEC alleged that Kraken made “hundreds of millions of dollars” since 2018 and deprived investors of significant protections by operating without registration. The lawsuit, filed in November 2023, accuses Kraken of commingling customer and corporate funds while operating as an unregistered broker, clearing agency, and dealer.
The SEC highlighted a long list of tokens it considers securities that Kraken traded, each appearing in multiple SEC enforcement actions. The SEC’s lawsuit claimed Kraken created a “significant risk” by blending up to $33 billion in customer crypto with its corporate assets.
Additionally, Kraken sometimes held more than $5 billion worth of its customers’ cash. It blended some of its customers’ cash with its own, even using these funds to cover operational expenses.
Kraken Plans to Fight SEC Rigorously
This case is part of a broader regulatory action by the SEC against crypto exchanges. The SEC’s filing seeks to permanently ban Kraken from operating as an unregistered exchange and is also pursuing a fine and restitution of ill-gotten gains.
In response, Kraken has disagreed with the SEC’s complaint, asserting that they do not list securities and plan to defend their position vigorously. Kraken argues that the SEC’s “regulation by enforcement” approach harms American consumers, stifles innovation, and damages US competitiveness globally.
