Kraken Faces SEC Probe Over Sale Of Unregistered Securities

• Kraken is reportedly facing a probe by the SEC over the sale of unregistered securities. 
• The securities regulator is probing whether the exchange violated securities law while offering certain tokens. 
• The probe is at an advanced stage with a potential settlement in the coming days. 
• A settlement may reinforce the SEC’s bid to assume jurisdiction over crypto tokens.

American crypto exchange Kraken is reportedly facing a probe by the U.S. Securities and Exchange Commission (SEC). The securities regulator believes that the exchange, which is ranked third in the world by daily trading volume, may have violated securities laws while offering certain crypto tokens for sale in the United States. 

Kraken may settle with the SEC soon

According to a report by Bloomberg, people familiar with the matter revealed that the regulator’s probe revolves around whether Kraken was involved in the sale of unregistered securities. The probe is reportedly at an advanced stage and the exchange may reach a settlement with the SEC in the coming days. The SEC’s probes don’t necessarily result in enforcement actions. The securities regulator has settled with a fine or penalty on several occasions. 

A settlement with the SEC in the current probe may reinforce the agency’s bid to assume jurisdiction over crypto tokens. It may set a precedent for other crypto firms to register with the regulator, something that Kraken CEO Dave Ripley had ruled out when he assumed his role at the exchange in September last year. 

News of the probe comes two months after Kraken settled a case with the Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury. The case was over allowing customers from Iran to trade on the trading platform, which violated the sanctions against Iran. The exchange paid a fine of over $360,000 and invested an additional $100,000 toward sanctions compliance. 

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