United States of America: Filed SEC lawsuit against Kraken for illegal offer and sale of unregistered securities

On 20 November 2023, the Securities and Exchange Commission (SEC) charged Payward and Payward Ventures, collectively known as Kraken, for operating Kraken's crypto trading platform as an unregistered securities exchange. The companies were accused of operating Kraken as an exchange, broker, dealer and clearing agency without prior registration with the SEC, which constitutes a violation of the Securities Exchange Act of 1934. Kraken has allegedly operated since September 2018 and facilitated the buying and selling of crypto asset securities, depriving investors of necessary protections. The SEC also charged Kraken over its business practices, namely deficient internal controls and lack of recordkeeping. According to the complaint, Kraken mixed its customers' funds with its own, even covering operational costs directly from accounts containing customer cash. The SEC complaint asks for injunctive relief and disgorgement for the illegal gains.