Kraken to Close Crypto Pledge Business Following SEC Allegations

03/16/2023 07:30 • Daily Digest • 74 views

According to reports, according to an industry insider familiar with the situation, Kraken has agreed to close its cryptocurrency pledge business to resolve allegations with the United States Securities and Exchange Commission (SEC).

Insider: Kraken has agreed to close the encryption pledge business to resolve the SEC’s allegations

Analysis based on this information:

Kraken, one of the world’s largest cryptocurrency exchanges, has reportedly agreed to shut down its cryptocurrency pledge business in order to resolve allegations made by the United States Securities and Exchange Commission (SEC). The decision comes on the back of a legal enforcement action filed against the exchange by the SEC in May 2021.

According to an industry insider familiar with the situation, Kraken’s cryptocurrency pledge business allowed users to stake their cryptocurrency holdings in exchange for loans. However, the SEC alleges that the exchange failed to register the offering as a securities transaction, violating U.S. securities laws.

Kraken, which has previously made a stand against the SEC’s regulatory overreach in the cryptocurrency industry, has now decided to settle the matter by closing its cryptocurrency pledge business. The exchange has stated that it will continue to operate under its current business model, which does not involve the offer or sale of securities.

The decision to close its cryptocurrency pledge business is likely a proactive measure by Kraken to avoid any further regulatory action by the SEC. While the exchange has yet to officially comment on the matter, it is clear that it is taking the allegations seriously and is prepared to take swift action to resolve them.

The news of Kraken’s decision to shut down its cryptocurrency pledge business may come as a shock to some in the cryptocurrency community, as Kraken has long been known as a vocal critic of regulatory overreach in the space. However, it is a sign that even the largest players in the industry are not immune to regulatory scrutiny, and that compliance with securities laws is becoming increasingly important for companies operating in the cryptocurrency sector.

In conclusion, Kraken’s decision to close its cryptocurrency pledge business is a clear indication that regulatory compliance is becoming an essential aspect of doing business in the cryptocurrency industry. While some may see it as a setback for the industry’s push for decentralization and deregulation, it is a necessary step towards mainstream adoption and acceptance. Ultimately, it is up to exchanges and other companies in the sector to ensure that they are in full compliance with securities laws, lest they face similar regulatory action from the SEC and other regulatory bodies.

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