The SEC alleges that Kraken operated its cryptocurrency trading platform as an unregistered stock exchange, broker, dealer, and clearing agency and made hundreds of millions of dollars by illegally facilitating the purchase and sale of crypto-asset securities, as well as having business practices, insufficient internal controls, and poor record-keeping practices that posed a risk to customers.
The U.S. Securities and Exchange Commission (SEC) charged Payward Inc. and Payward Ventures Inc. (collectively referred to as Kraken) with operating Kraken’s cryptocurrency trading platform in a manner that operated unregistered stock exchanges, brokers, dealers, and clearing agencies.According to the SEC’s complaint, Kraken made hundreds of millions of dollars by illegally facilitating the purchase and sale of crypto-asset securities since September 2018.The SEC alleges that Kraken intertwined traditional exchange, broker, dealer, and clearing agency services without registering these functions with the Commission, as required by law.Kraken’s failure to register these functions deprived investors of important protections including SEC scrutiny, record-keeping requirements, and protection against conflicts of interest.