Cryptocurrency exchange Kraken has announced that it is ready to defend itself in court after being charged by the U.S. Securities and Exchange Commission (SEC).
On November 21, the SEC filed a lawsuit against Kraken, stating that the cryptocurrency platform has refused to register as a securities exchange, clearing house, broker, or dealer since September 2018. In addition, the U.S. regulator accused Kraken of commingling its own funds with user funds to pay its operating expenses.
Marco Santori, Kraken's Chief Legal Officer, said in an interview with CNBC that he intends to challenge the SEC's allegations in court.
"The SEC alleges that… Kraken is an exchange clearing house and broker-dealer for investment contracts. None of those things exist… there's no such thing… it's entirely and hollow made up by the agency, and so we disagree", Santori said.
Santori stressed that the legal process with the U.S. Securities and Exchange Commission could be very long and take several months.
Kraken's Chief Legal Officer pointed out that the exchange is not avoiding regulation and hopes to create an effective legal framework for the crypto industry. At the same time, he points out that other countries are developing a new, transparent, and clear legal framework to regulate cryptocurrency companies, unlike the U.S., where the rules are vague and lack clear definitions.
Santori also noted that the outcome of Ripple's case against the SEC in July, when the court ruled that the XRP token was not a security, set an important precedent. In his opinion, that victory not only inspired other cryptocurrency platforms facing similar litigation to stand up for themselves but also showed them how to do so.
"I think the decision in the Ripple case was well-reasoned. For the most part, it was balanced, and we hope that other courts will take the same view," Santori said.
Recall that in late October, the U.S. Internal Revenue Service (IRS) asked Kraken to provide data on the transactions of 40 thousand clients between 2016 and 2020, which exceeded $20,000, in order to verify whether users of digital assets pay taxes in good faith.
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