Kraken Is Latest Crypto Firm To Say SEC Agrees To Drop Lawsuit
Kraken said the US Securities and Exchange Commission has agreed in principle to drop its lawsuit against the cryptocurrency exchange, the latest in a series of dismissals of legal actions against crypto companies by the market regulator.
There will be no admission of wrongdoing, no penalties paid and no changes to the business, Kraken said in a blog post Monday. A spokesperson for the SEC declined to comment.
In the last month alone, the securities watchdog has dismissed or paused at least nine cases against crypto companies, including those that targeted some of the sector's most prominent faces. The running tally includes high-profile lawsuits against crypto exchanges Coinbase Global Inc and Binance Holdings Ltd. — who were sued within one day of each other in mid-2023 — as well as threats of legal action against Robinhood Markets Inc., Uniswap Labs and OpenSea.
In November 2023, the agency sued San Francisco-based Kraken for operating as an unregistered securities exchange, broker, dealer and clearing agency. Earlier that year, Kraken reached a settlement after the agency alleged that the firm's cryptoasset staking service was an illegal sale of securities. Kraken agreed then to immediately cease offering staking services in the US and to pay $30 million in penalties. The company has since restarted the US staking business.
A slew of enforcement actions were taken during the Biden administration after the collapse of the crypto exchange FTX in 2022.
The SEC's about-face came swiftly after the departure of former chair Gary Gensler, who stepped away in late January. He is expected to be replaced by former SEC commissioner Paul Atkins, with Mark Uyeda acting in the role while Atkins awaits confirmation.
On the campaign trail, President Donald Trump pledged to fire Gensler on his first day in office due to his unpopularity in crypto circles — one of many promises made to the industry that bankrolled the Republican Party's return to majority power. His support buoyed Bitcoin, crypto's most valuable asset, to an all-time high on his inauguration day, though subsequent policy decisions on tariffs sent it down as much as 28% off the peak.
Kraken co-founder Jesse Powell was a large contributor to Trump's campaign.
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