SEC To Drop Lawsuit Against Crypto Exchange Kraken

The US Securities and Exchange Commission has agreed in principle to dismiss a lawsuit against crypto firm Kraken accusing it of acting as an unregistered securities exchange, the company said, in the latest move by the incoming administration to end a crackdown on the industry.

Kraken said the action against it and other crypto companies had been a “wasteful, politically motivated campaign” by the previous administration that impeded innovation and investment.

The lawsuit is to be dismissed with prejudice, meaning the SEC cannot refile it in the same form, Kraken said.

Policy shift

The dismissal is to proceed without admission of wrongdoing, penalties or changes to Kraken’s business, it said.

The SEC sued Kraken in November 2023 saying the company had acted as a broker, dealer, exchange and clearing agency for securities without registering as such.

It also accused the company of mingling customers’ crypto assets and fiat currencies with its own, creating a “significant risk of loss” for customers.

Kraken had previously agreed to stop offering its interest-paying crypto staking service in the US and pay a $30 million (£24m) fine to the SEC in February 2023.

In January the company returned to staking in the US with a new service in 37 states and two territories.

Regulatory clarity

The SEC has in the past week dismissed cases against Coinbase, the largest US crypto exchange, and Consensys and has dropped multiple investigations in the industry.

The agency said a new task force is working on “a comprehensive and clear regulatory framework for crypto assets”.

Bitcoin, the largest cryptocurrency, last week saw its biggest weekly price decline since the collapse of exchange FTX in 2022, amidst questions over the administration’s crypto plans and a $1.5bn North Korean heist of crypto assets from the world’s second-largest crypto exchange Bybit.

But prices recovered over the weekend after Trump said he wanted multiple cryptocurrencies to be included in a proposed national strategic crypto reserve.