Jesse Powell, the co-founder of crypto exchange Kraken, has launched a scathing attack on the United States Securities and Exchange Commission (SEC) after the agency filed a lawsuit against Kraken for alleged securities law violations. In a tweet posted on Nov. 21, Powell labeled the regulator as “USA’s top decel” – a term used in tech circles to insult someone who slows progress – and criticized the SEC for pursuing legal action against the exchange despite a previous $30 million settlement in February.
Powell expressed dissatisfaction with the SEC’s actions, stating, “The masochists haven’t been happy with the beatings they’ve been taking in NY and are shopping for a different flavor of RegDom in CA. I thought we settled all their concerns for $30m in Feb. Now they’re back for seconds?” In a subsequent tweet, Powell warned other crypto companies to leave “the US warzone” to avoid expensive legal battles, highlighting the high costs associated with defending against the SEC.
The SEC had previously charged Kraken with “failing to register the offer and sale of their crypto asset staking-as-a-service program.” As part of the settlement, Kraken agreed to pay $30 million and cease offering crypto-staking products and services to U.S. customers. Powell’s comments come in response to a lawsuit filed by the SEC on Nov. 20, which accused Kraken of several securities law violations, including failure to register as a securities broker and commingling customer and corporate funds.
In response to the lawsuit, a Kraken spokesperson denied listing unregistered securities and described the legal action as “disappointing,” pledging to defend the exchange’s position in court. In a blog post, Kraken addressed the commingling accusations, stating that the SEC’s allegations were “no more than Kraken spending fees it has already earned,” and clarified that the regulator did not allege any missing user funds.
Powell’s outspoken criticism of the SEC and the regulatory environment in the United States reflects the growing tension between crypto companies and government authorities. The increasing regulatory scrutiny of the crypto industry has prompted concerns among market participants about the potential impact on innovation and the overall growth of the sector.
Despite the challenges posed by regulatory actions, Kraken remains committed to its mission of advancing crypto innovation in the United States. The exchange’s resolve to defend its position in the face of legal challenges underscores the broader industry’s determination to navigate the evolving regulatory landscape while continuing to drive technological advancements in the field of digital assets.
As the crypto industry grapples with regulatory pressures, the outcome of legal disputes such as the one involving Kraken and the SEC will have far-reaching implications for the future of the sector. The resolution of these conflicts will not only shape the trajectory of individual companies but also contribute to defining the regulatory framework that governs the development and adoption of digital assets in the United States and beyond.
In conclusion, Jesse Powell’s criticism of the SEC’s legal action against Kraken reflects the ongoing tensions between the crypto industry and regulatory authorities. As the industry navigates a rapidly evolving regulatory landscape, the outcome of legal disputes involving crypto companies will exert a profound influence on the trajectory of the sector and the development of digital assets globally. Despite the challenges posed by regulatory pressures, Kraken’s unwavering commitment to defending its position underscores the resilience and determination of the broader crypto community to pursue innovation in the face of evolving regulatory dynamics.