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SEC Probes Kraken for Potential Securities Law Violations

• The SEC is examining Kraken for possible violations of US securities law.
• If Kraken reaches a settlement with the SEC, the regulator could gain more jurisdiction over the crypto industry.
• The SEC has mainly used enforcement when it comes to cryptocurrency regulation instead of publishing guidelines.

SEC Investigating Kraken

The U.S. Securities and Exchange Commission (SEC) is probing cryptocurrency exchange Kraken over a potential breach of U.S. securities law by offering unregistered securities to its customers in the United States. Reports suggest that the probe is already in advanced stages and a conclusion could be announced soon.

Kraken’s Offerings

Kraken currently offers more than 185 cryptocurrencies globally, many of which are not offered in the United States. It is unclear which offerings are being scrutinized by the SEC at this time, but any violation of securities laws could lead to fines or other punishments for Kraken if it settles with the regulator.

SEC’s Regulatory Strategy

So far, the SEC has mainly used enforcement when it comes to regulating cryptos instead of publishing clear guidelines for investors and exchanges alike. In September 2020, Gary Gensler, chairman of the SEC said that proof-of-stake cryptocurrencies could be deemed as securities under certain conditions according to Howey test criteria.

Implications of Settlement

If Kraken settles with the regulator, this could set up a precedent that would allow the agency to assume jurisdiction over crypto tokens more broadly going forward and reinforce its stance on regulating cryptos in 2023 and beyond.


The probe against Kraken shows that while regulatory clarity remains an issue in terms of governing digital assets, regulators like the SEC are willing to take action against those who violate regulations or offer services without proper registration or authorization from authorities like itself or other relevant bodies such as FINRA or CFTC .