SEC Drops Legal Action Against Kraken

The United States Securities and Exchange Commission (SEC) has made a significant move in favor of the cryptocurrency market by agreeing to drop its lawsuit against leading crypto exchange Kraken. In a blog post titled “A win for fairness,” Kraken declared:

> “Today marks a pivotal moment for Kraken. The SEC staff has agreed in principle to dismiss its lawsuit against Kraken with prejudice, with no admission of wrongdoing, no penalties paid, and no changes to our business.”

Allegations Against Kraken

Filed in November 2023, the SEC accused Kraken of breaching securities law. The exchange allegedly operated as a securities exchange, broker-dealer, and clearing agency without fulfilling necessary legal requirements since at least September 2018. Moreover, the SEC claimed that Kraken mingled $33 million of customer assets and failed to meet record-keeping requirements while lacking safeguards against conflicts of interest.

Kraken commented on the SEC’s decision:

> “The SEC’s decision to dismiss its lawsuit against us (and many others) is more than just a legal victory — it’s a turning point for the future of crypto in the U.S. It ends a wasteful, politically motivated campaign, lifts uncertainty that stifled innovation and investment, and clears the path toward a stable, forward-thinking regulatory regime.”

Broader Crypto-Friendly Changes

This isn’t the first instance of the SEC abandoning a crypto-related lawsuit; recent weeks have seen similar actions against major players like Coinbase, Gemini, and Consensys. Additionally, the SEC clarified that memecoins would not be classified as securities.

This shift coincides with a broader change in the US government’s approach towards cryptocurrency, particularly following President Donald Trump’s announcement of a US Crypto Reserve, which significantly boosted the crypto market.

Kraken highlighted the positive impact of the new administration:

> “We appreciate the new leadership both at the White House and the Commission that led to this change. Their bold and thoughtful leadership will lead to a new era of U.S. crypto innovation.”