The U.S. SEC has filed a lawsuit against Kraken for offering cryptocurrency services on assets the regulatory agency alleges to be securities, but XRP does not make the cut.
On Monday, the SEC accused Payward and Payward Ventures, operating as Kraken, of serving U.S. customers as a securities exchange, broker and clearing agency without proper registration with the agency. According to the SEC, Kraken deals on crypto assets considered securities.
“Many of the crypto assets available through Kraken are securities,” the SEC said in its lawsuit, filed in a U.S. District court in the Northern District of California. The agency alleged that Kraken put its investors at risk by offering these assets since 2013 without proper registration.
XRP Unsurprisingly Missing
In a list of the assets in question, the SEC mentioned ADA, MATIC, NEAR, COTI, CHZ, ALGO, ATOM, SOL, FIL, AXS and several other tokens. Most of these assets made the list of alleged securities in the SEC’s cases against Binance and Coinbase.
Amid the ensuing chaos, an interesting observation is the sustained absence of XRP in these lawsuits, including the latest Kraken case. Recall that the SEC alleged that XRP was an unregistered security in its lawsuit against Ripple and its executives.
After over two years of legal tussle, Judge Analisa Torres ruled that XRP in itself is not a security. The legal victory rekindled hope in the crypto community at a time when the SEC’s onslaught against the industry had triggered concerns of sustained regulation by enforcement.
Notably, Kraken had suspended support for XRP shortly after the SEC charged Ripple in December 2020. However, following the pivotal ruling in July this year, the U.S.-based exchange joined other platforms to resume support for the asset.
Despite re-onboarding XRP, the SEC’s recent lawsuit against Kraken fails to mention XRP among the alleged securities. This pattern prevailed in the Binance and Coinbase lawsuits, solidifying the common belief that XRP is the only crypto asset with legal clarity in the U.S.
Although the SEC also avoids Bitcoin (BTC) and Ethereum (ETH) in these lawsuits, the status of ETH remains contested, as Gary Gensler, the agency’s chairperson has declined to categorize the asset as a security or a commodity. Meanwhile, BTC has not undergone a trial on its status.
Kraken Aims to Defend Itself This Time
In the wake of the SEC’s charges, Kraken revealed plans to defend itself against the allegations. Crypto exchanges Coinbase and Binance took a similar stand.
Today, the SEC filed a complaint alleging that Kraken operates as an unregistered national securities exchange, broker, and clearing house. We disagree with their claims and plan to vigorously defend our position. https://t.co/a0C4wzBo3f
— Kraken Exchange (@krakenfx) November 21, 2023
On the other hand, the trading platform Bittrex agreed to pay $24 million in settlement to the SEC three months back after the agency’s charges in April. Interestingly, Bittrex recently announced plans to shut down, a similar fate to LBRY shortly after the SEC’s case.
The recent lawsuit would not be Kraken’s first run-in with the securities regulator. In February, the SEC filed a similar lawsuit against Kraken, alleging that its staking-as-a-service program was an unregistered securities offering. Kraken agreed to discontinue the service and pay a fine of $30 million.
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