The crypto space has been making its feelings known about the latest blow from regulators in the United States,ย a lawsuit filed by the Securities and Exchange Commission (SEC) against crypto exchange Kraken.ย
The lawsuit was filed on Nov. 20 based on the SEC’s allegations that Kraken has been operating as an unregistered exchange, broker, dealer and clearing agency and claiming that it is mixing customer assets with its own.
Since the news broke, the crypto community on social media, Kraken executives and prominent lawyers have been vocal in expressing their views on the SEC’s action.ย
The day the news broke, Kraken founder Jesse Powell called the action an โassault on Americaโ and named the SEC the U.S.’s โtop decel.โ Powell even warned other companies to depart from the U.S.
On Nov. 21, the current CEO of Kraken, Dave Ripley, took to X and said the company โstrongly disagreesโ with the SEC claims and plans to โvigorouslyโ defend its position.
We strongly disagree with the SEC claims, stand firm in our view that we do not list securities, and plan to vigorously defend our position.
As we have seen before, the SEC argues that @krakenfx should โcome in and registerโ with the agency, when there is no clear path toโฆ
โ Dave Ripley (@DavidLRipley) November 21, 2023
As an industry leader, we will stand up to these allegations and defend the crypto industryโs right to exist in the U.S.,โ he said. Ripley said the โlack of regulatory clarity in the U.S.โ will only be resolved by Congressional action.ย
โ[We] will continue to support these efforts to bring clarity and certainty to the chaotic environment that has been created in the U.S.โ
Related: Kraken will share data of 42,000 users with IRS
Prominent crypto lawyer John Deaton also commented on the development, calling Gary Gensler, the current SEC chairman, a โdespicable and dishonorable regulator.โ
Deaton commented on Krakenโs decision in February to payย $30 million to the SEC in a settlement deal.
@GaryGensler is a despicable and dishonorable regulator. He knew that @krakenfx believed it was buying peace for the $30M. I know some people are critical of itโs choice to settle and pay the $30M. I wanted them to fight as well. But when you decide to fight, $30M takes you onlyโฆ https://t.co/WeF4YTMfip
โ John E Deaton (@JohnEDeaton1) November 21, 2023
He said he believes Gensler does not care about any of the parties involved – employees or investors- and ended by saying, โheโs a disgrace, and I canโt wait to see him go down.โ
When asked if Kraken stands a chance against the SEC in court for round two, crypto criminal defense lawyer Carlo DโAngelo posted on X, formerly Twitter, that he doesnโt see the odds being in the SECโs favor.ย
โSimilar arguments have been tried and failed in other circuits. The judge in the Kraken case will likely look closely at those decisions. Judges like consistent precedentsโless chance of getting reversed on appeal.โ
One user responded, โJust because the sec says something, [doesnโt] make it true! Get them to explain in detail to the court how to come on and register and operate normally.โ
The SEC has received a lot of backlash for its harsh crackdown on crypto, particularly as the industry is operating in a legal system that has not yet provided clear legislation for cryptocurrencies and exchanges working with digital assets.
However, the crypto space does have allies on the regulatory side too. U.S. Senator Cynthia Lummis posted a response to the lawsuit saying the SEC cannot continue to โrule by enforcement.โ
The SEC cannot continue ruling by enforcement. My statement on the Kraken lawsuit below: pic.twitter.com/J3qhzU624N
โ Senator Cynthia Lummis (@SenLummis) November 21, 2023
She said crypto companiesโ have made โrepeatedโ attempts to receive guidance from the SEC but have seen no progress. House Representative Tom Emmer is also backing the industry, and recently proposed defunding the SECโs crusade against crypto.
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