The U.S. Securities and Exchange Commission has agreed to dismiss its lawsuit against cryptocurrency exchange Kraken. This decision, reached with prejudice, means the case cannot be refiled, and notably, Kraken will not admit to any wrongdoing, pay any penalties, or make changes to its business operations.
The lawsuit, initiated in November 2023 under former SEC Chair Gary Gensler, accused Kraken of operating as an unregistered securities exchange. At that time, the SEC alleged that Kraken had been facilitating the trading of digital assets deemed securities without proper registration, a move reflecting the agency’s stringent approach toward cryptocurrency platforms.
However, the regulatory landscape has shifted significantly with the appointment of Paul Atkins as the new SEC Chair under President Donald Trump’s administration. Atkins, known for his more favorable stance on digital assets, has steered the SEC toward a collaborative approach with the cryptocurrency industry. This policy shift aims to balance investor protection with fostering innovation within the digital asset economy.
Kraken’s official statement hailed the lawsuit’s dismissal as a pivotal moment for the U.S. crypto sector. The company emphasized that the SEC’s decision ends a “wasteful, politically motivated campaign” and removes uncertainties that had previously stifled innovation and investment. Kraken expressed appreciation for the new leadership at both the White House and the SEC, attributing the positive change to their “bold and thoughtful” approach.
The SEC has not issued a public comment regarding the dismissal.
This development is part of a broader trend under the current administration, which has signaled a more supportive regulatory environment for digital assets. The SEC’s recent actions include halting or dropping lawsuits against major cryptocurrency entities such as Binance, Coinbase, and Justin Sun. The agency has also restructured its crypto division, forming a “crypto task force” to establish clear regulatory guidelines while scaling down its investigative branch. This shift reflects the administration’s intent to encourage innovation while safeguarding investors from potential fraud.
Critics caution that this rapid policy reversal might reduce necessary scrutiny of the cryptocurrency industry, potentially allowing fraudulent activities to go unchecked. John Stark, a former SEC attorney, warned that the drastic changes could diminish oversight, emphasizing the need for a balanced approach to regulation.
Kraken’s history with regulatory bodies has been contentious. In February 2023, the company agreed to a $30 million settlement with the SEC over allegations that its crypto-asset staking products violated regulatory rules. Additionally, in November 2022, Kraken paid a $362,000 fine to the Office of Foreign Assets Control for potential violations of sanction regimes by allowing trade with customers based in Iran. The company has also faced fines from the Commodity Futures Trading Commission for offering unregistered margin trading.
Despite these challenges, Kraken has maintained its commitment to compliance and consumer protection. The company asserts that the dismissal of the SEC lawsuit reaffirms its dedication to operating with integrity within the evolving regulatory framework.
Arabian Post – Crypto News Network
