Cryptocurrency exchange Kraken is reportedly under investigation by the U.S. Securities and Exchange Commission (SEC) for violating securities offering rules.
According to Bloomberg on February 8 report, the probe looks at some deals Kraken has made to US customers. An individual conversant in the matter said the investigation is at a sophisticated stage and a settlement might be reached in the approaching days.
However, at this stage it just isn’t clear which offers are being reviewed by the securities regulator.
When asked in regards to the alleged probe, an SEC spokesperson told Cointelegraph: “The SEC doesn’t comment on the existence or non-existence of a possible investigation.”
Kraken didn’t immediately reply to a request for comment.
Gensler said in December 2022 that his principal goal The primary focus of cryptocurrency regulation throughout 2023 was ensuring compliance of cryptocurrency exchanges and lending platforms, which he suggested might be done by registering firms with the SEC or through enforcement actions.
Related: Judge dismisses proposed class motion lawsuit over sale of Coinbase securities
Kraken CEO Dave Ripley argued in September 2022 that he sees no have to register Kraken as an exchange with the SEC since it doesn’t offer securities, adding “There are not any tokens which might be securities that we’re all for listing.” .
However, SEC Chairman Gary Gensler has repeatedly said that he considers most cryptocurrencies apart from Bitcoin (BTC) to be securities.
However, the SEC recently admitted in the course of the January 30 appeal hearing within the LBRY v. SEC case that the sale of LBRY Credits (LBC) within the secondary market just isn’t a security, after the judge was persuaded by the argument of attorney John Deaton emphasizing that the courts have never found the underlying asset to be protection in similar cases.
The regulator often refers back to the “Howey test” to find out what constitutes a security. The name comes from the 1946 SEC v. Howey case, which set a precedent within the US for what transactions are considered securities.
It ruled that the transaction qualifies as an investment arrangement – and due to this fact is taken into account a hedge – when an investment is made in a three way partnership with profits derived solely from the work of others.
