Tuesday, March 28, 2023

Kraken CEO Expresses Regret Over Paying $30m to the SEC


Gary Gensler and the Securities and Exchange Commission (SEC) have accused Kraken, a prominent cryptocurrency exchange, of violating securities laws. In response, Kraken has agreed to pay a $30 million fine and has reached a permanent agreement to cease its staking services in the United States, which has been met with disappointment from the cryptocurrency community. 

Following the resolution of the issue, Kraken CEO Jesse Powell has expressed regret over the settlement and acknowledges that the outcome might have been prevented if he had acted differently.

Powell Speaks Out 

During an interview with CNBC, Gensler revealed that Kraken was offering returns on cryptocurrency tokens to its customers, ranging from 4% to 21%. Unfortunately, the exchange allegedly failed to warn its customers of the potential risks they faced.

Gensler suggested that Kraken was aware of the registration process, which involves completing a form on the SEC’s official website for full transparency to investors.

Jesse Powell responded to these allegations, stating that all he had to do was fill out a form on a website to inform others that staking benefits were provided through staking. He regrets not having taken this step before being forced to pay a $30 million fine.

Earlier, Powell had said:

“I honestly hope that somebody proves, in court, that there is a legal, user-friendly version of custodial staking that can be offered to US consumers…It’ll be a brutal, lengthy, expensive fight … but the industry and the USA will be extremely grateful.”

The CEO of Kraken said that his company did not take on the SEC due to the low expected return of a court battle. He added that the SEC singled out Kraken during a bear market when it had to lay off 30% of its workforce because the agency knew it lacked the capacity to fight back.

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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On Monday, the CEO of Kraken, a popular cryptocurrency exchange, expressed regret over the firm’s recent $30 million payment to the U.S. Securities and Exchange Commission (SEC).

Kraken CEO Jesse Powell recently took to Twitter to express his view that the payment was unnecessary, saying, “We regret settling with the SEC – we wish we had the fortitude to take this all the way.”

Kraken’s payment settled alleged securities violations dating back to 2019. Specifically, the firm was accused of failing to register properly with the SEC prior to offering its services to US customers, as well as not properly handling customers’ private information. In lieu of registering with the SEC, the firm chose to settle for $30 million.

Powell went on to note that he believed the settlement had little bearing on the SEC’s enforcement practices, nor would it be reflective of real or meaningful change for the better.

The settlement between Kraken and the SEC is one of the first to involve a US-based cryptocurrency trading platform. However, experts believe that given the industry’s expanding and evolving nature, other firms offering similar services are likely to be closely monitored and regulated by the SEC in the future.

Nevertheless, many of Kraken’s customers have a positive view of the firm and its CEO despite the settlement. They view the action taken not as an indication of wrongdoing, but rather as a sign that the company is following the law and doing whatever is necessary to remain an attractive and viable option for those looking to invest in cryptocurrency.

Ultimately, Powell and his team should be commended for doing the right thing and paying the settlement, rather than risking stiffer penalties down the road. While they may have expressed regret over their decision, they have done what is necessary to ensure that the company is able to provide a safe, secure trading experience for their customers.

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