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The U.S. Securities and Exchange Commission (SEC) has reportedly been investigating crypto exchange Kraken for possible violations of offering unregistered securities in the country. However, it still isn’t apparent which crypto tokens or offerings are drawing scrutiny by the financial watchdog.
Kraken Under SEC Scanner
The investigation against Kraken is reportedly at an advanced phase, and it is possible that a settlement may be reached in the days to come, as stated in the latest report. The fall of FTX late last year has put the industry under intense scrutiny in the States, and any action taken against Kraken might have far-reaching consequences.
A settlement with the SEC might put pressure on other cryptocurrency firms to negotiate arrangements with the regulator, which has stated on multiple occasions that the majority of the tokens being traded are securities that should be subject to the agency’s rules. Investigations conducted by the SEC do not necessarily result in enforcement action, but they can lead to companies and people being fined and facing other consequences instead.
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According to market data, the cryptocurrency exchange Kraken, which is headquartered in San Francisco and has a daily trading volume of over $650 million globally, is the third largest in the world. The company claims that it supports more than 185 different cryptocurrencies on its website, but it is unclear how many of those cryptocurrencies are actually tradeable by customers in the United States.
Earlier Bouts With Authorities
Late in 2017, Kraken reached a settlement with the Office of Foreign Assets Control of the Treasury over claims that it had violated US sanctions against Iran. This settlement was unrelated to the original allegations. As part of the agreement, the corporation committed to making a payment of somewhat more than $360,000 and an investment of $100,000 in sanctions compliance. OFAC reported at the time that Kraken willingly informed the government of the suspected infractions and cooperated with the inquiry into the matter.
Moreover, the SEC is looking into one of Kraken’s rivals, Coinbase Global Inc., for its token listings, which CoinGape previously reported. In a complaint brought against a former Coinbase employee and two other people as part of an insider trading case, the agency did identify a number of tokens offered on the exchange as securities, but it hasn’t expressly accused Coinbase of providing unregistered securities.
The Kraken exchange appears to be in a state of uncertainty as with the ongoing SEC investigation, it also recently closed operations in Abu Dhabi less than a year after being granted a local license. Earlier, it ceased conducting business in Japan, citing the weakening demand for cryptocurrency coupled with the country’s increasingly stringent regulatory environment.
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