“The crypto game feels a bit more fair today,” Kraken co-founder Jesse Powell said in an X post on Wednesday.
In the wake of Binance co-founder Changpeng Zhao stepping down as CEO and pleading guilty to criminal charges of money laundering, Powell held nothing back in his assessment of the situation.
“The last 12 months have answered 2 nagging questions from shareholders: 1. How are they going so fast? 2. How are they getting away with it?” Powell wrote. “It’s hard to keep faith while your market share dwindles and the only enforcement that’s happening is against the good guys.”
Powell added that Kraken is playing the long game, with shareholders who understand that patience will be needed during this uncertain time in crypto and indeed, for Kraken.
“Fortunately, we have very long-term oriented shareholders who understand that this holy mission is a marathon, and that we must lead by example,” Powell added.
On Monday, the US Securities and Exchange Commission (SEC) charged Kraken with operating as an unregistered securities exchange, broker, dealer, and clearing agency.
The SEC had previously charged Kraken in February with the failure to register the offer and sale of its crypto asset staking-as-a-service program. Kraken’s parent firms settled the charges by coughing up $30 million in “disgorgement, prejudgment interest, and civil penalties.”
“Message is clear: $30m buys you about 10 months before the SEC comes around to extort you again,” Powell said in a separate post following the Monday lawsuit. “Lawyers can do a lot with $30m but the SEC knows that a real fight will likely cost $100m+, and valuable time. If you can’t afford it, get your crypto company out of the U.S. warzone.”
Self-policing is crucial as crypto companies “clearly cannot count on timely protection,” Powell continued. He asserted that Coinbase, Ripple, and Kraken would remain “easy targets” for the SEC, while claiming that “each dodgy operation represents an opportunity for governments to scapegoat crypto and tighten the noose.”
“Going after the most egregious offenders offshore would require effort. It’s not about protecting people,” he said.
In a blog post published on Monday after the filing of the SEC’s lawsuit against Kraken, the company emphasized that the SEC’s assertion characterizing its products as investment contracts was “incorrect as a matter of law, false as a matter of fact, and disastrous as a matter of policy.”
“As most securities law experts know, there is not a single law on the books supporting this position,” Kraken noted. “The allegation is hollow; there is no such thing as an exchange, broker dealer, or clearing agency for investment contracts. The SEC is demanding compliance with a regime that doesn’t exist.”
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