In response to the charges brought by the U.S. Securities Exchange Commission (SEC), Kraken, a prominent digital asset exchange, is determined to fight and address the complaint in court. According to Marco Santori, the Chief Legal Officer (CLO) of Kraken, the SEC’s allegations are baseless and lack substance. Speaking in an interview with CNBC, Santori emphasized that Kraken is not an exchange clearing house or broker-dealer for investment contracts, contrary to what the SEC claims. He firmly stated, “None of those things exist… it’s entirely hollow made up by the agency, and so we disagree.” Kraken’s resolve to challenge the accusations highlights the company’s commitment to clarifying its position and upholding its reputation.
Santori went on to denounce the SEC’s actions as poor policy and noted that other countries around the world are actively developing regulatory frameworks that are well-suited for digital asset companies. Although the United States has yet to follow suit, members of Congress are currently working towards establishing comprehensive legislation for the crypto industry. Santori emphasized that Kraken seeks appropriate regulations, rather than evading them, and expressed the need for a legal framework that aligns with the unique requirements of the crypto ecosystem.
Highlighting Ripple’s recent court win against the SEC in July, Santori implied that the ruling set a precedent, affirming that on-exchange transactions are not considered securities transactions. He referred to the case as the “very first ruling on these issues” within the U.S. crypto industry and commended its comprehensive and levelheaded approach. Santori expressed confidence that future courts would adopt a similar perspective. Kraken’s mention of the Ripple case in a previous blog post suggests that it may draw inspiration from the legal victory while addressing more specific complaints raised alongside the broader securities charges.
One of the specific allegations made by the SEC is that Kraken commingled funds, an accusation that Kraken refutes and discounts within the complaint itself. While Kraken responded promptly to the charges upon their initial filing on November 20th, the company has yet to provide a detailed explanation regarding its approach to specific complaints. Kraken co-founder and board chairman Jesse Powell indirectly touched upon the matter, further signaling the company’s intention to actively address the allegations brought forth by the SEC.
Through its unwavering commitment to challenge the SEC allegations in court and its advocacy for sensible crypto regulation, Kraken aims to safeguard its reputation and foster a transparent and supportive ecosystem for digital asset companies. The ongoing legal battle against the SEC not only holds implications for Kraken but also for the broader crypto industry as it navigates towards increased regulatory clarity and legitimacy.