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Kraken (Payward Inc.) in Advanced Stages of SEC Unregistered Securities Probe

BNN Bloomberg | Allyson Versprille | Feb 8, 2023

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Kraken (legal name Payward Inc.), one of the world’s largest cryptocurrency exchanges, is embroiled in a probe by a top US financial regulator over whether it broke securities rules related to certain offerings to American clients

  • The Securities and Exchange Commission probe into whether Kraken offered unregistered securities is at an advanced stage and could lead to a settlement in coming days, said the person, who asked not to be identified discussing a case that hasn’t been made public. It wasn’t immediately clear which tokens or offerings are drawing scrutiny.
    • San Francisco-based Kraken is the No. 3 cryptocurrency exchange with daily trading volume of roughly $650 million globally, according to CoinMarketCap.
  • Any action against Kraken could have significant ramifications for the industry, already facing sharp scrutiny in Washington after FTX’s collapse late last year. A settlement with the SEC could pressure other crypto firms to hash out deals with the regulator, which has repeatedly said most of the tokens being offered are securities that should be subject to the agency’s rules.

See:  Federal Judge Dismisses Unregistered Securities Class Action Suit Against Coinbase (Shares Jump 21%)

  • Kraken reached an unrelated settlement with Treasury’s Office of Foreign Assets Control late last year over allegations that it violated US sanctions against Iran. The company agreed to pay a little over $360,000 as part of the deal and invest $100,000 in sanctions compliance. OFAC at the time said Kraken voluntarily disclosed the apparent violations to the government and cooperated with its investigation.

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