The Securities and Exchange Commission (SEC) has taken legal action against cryptocurrency exchange Kraken, in line with the ongoing U.S. government’s efforts to regulate the crypto industry. Surprisingly, the news did not deter the price of Bitcoin, as the market remains optimistic about a more favorable stance from the SEC.
According to the SEC’s allegations, Kraken has been operating as an unregistered securities exchange, broker, dealer, and clearing agency. The exchange has reportedly generated hundreds of millions of dollars since 2018 by facilitating the trading of crypto asset securities. These charges are reminiscent of the ones imposed on Coinbase Global earlier this year.
In addition to the above, the regulator claims that Kraken commingled customer funds with its own capital. This includes using client cash to cover operational expenses directly, which raises serious concerns within the crypto community. Similar allegations of commingling were central to the collapse of FTX exchange over a year ago, causing significant market turbulence.
Kraken swiftly responded with a statement, expressing disagreement with the SEC’s complaint and reaffirming their position as a platform that does not list securities. The exchange plans to vigorously defend itself against the allegations. Kraken also pointed out that the heart of the matter revolves around whether digital assets should be categorized as securities. Regarding the accusation of commingling, Kraken clarified that the SEC has not alleged any missing customer funds.
Despite facing legal challenges, Kraken remains steadfast in its commitment to providing a secure and compliant platform for its users. The outcome of this case will undoubtedly have significant implications for both Kraken and the wider crypto industry at large.
Bitcoin Price Stabilizes, Nearing Recent Peak
The price of Bitcoin has maintained its stability, experiencing a minor decrease of less than 1% in the past 24 hours, currently standing at $37,250. This comes after Bitcoin neared its peak of approximately $38,000 last week, which represents the highest level since the crypto market downturn in May 2022.
An analyst at Bitbank, Yuya Hasegawa, expressed that despite consistent fluctuations, Bitcoin has struggled to surpass the psychological barrier at $38,000. Hasegawa suggests that Bitcoin requires a catalyst to breakthrough.
Bitcoin has seen a remarkable recovery since early October, surging by over one-third. This growth accompanies the anticipation of the Securities and Exchange Commission’s (SEC) potential approval of the first spot Bitcoin exchange-traded fund (ETF). The introduction of such funds is widely expected to spark renewed interest from retail and institutional investors. However, the ultimate decision lies with the regulatory body.
In the present landscape, the SEC’s recent actions against Kraken indicate an ongoing struggle faced by the crypto industry concerning regulation. The continuous scrutiny and resistance from the agency may pose risks to Bitcoin’s current rally, as its success hinges on the possibility of receiving ETF approvals from the SEC.
Beyond Bitcoin, Ether, the second-largest token, experienced a slight 1% decrease, settling at $2,000. Altcoins and smaller cryptocurrencies showed a reversal in their earlier outperformance, with Cardano dropping by 4% and Polygon plummeting by 8%. Memecoins also experienced losses, as Dogecoin fell by 5% and Shiba Inu shed 4%.