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One of the biggest cryptocurrency exchanges, Kraken, was sued by the Securities and Exchange Commission on Monday, claiming that it had operated unlawfully without registering as a securities exchange. This action represents the SEC's most recent attempt to regulate the cryptocurrency market. Important Details In a press release, the SEC claimed that Kraken had made "hundreds of millions of dollars" illegally since 2018. By operating without a license, the SEC claims that Kraken "has deprived investors of significant protections." According to the lawsuit, Kraken should register with the SEC since many of the cryptocurrency assets that its customers can trade on the platform are legitimately classified as securities. However, Kraken has been operating as a securities exchange, broker, dealer, and clearing agency all at once without registering with federal regulators. In addition, Kraken is charged with having inadequate internal controls and bad recordkeeping procedures, which the SEC claims pose a number of risks for its clients. These include "commingling its customers' money with its own" and funding operations out of the accounts that contain client funds. The lawsuit was filed in San Francisco federal district court and asks the judge to disgorge ill-gotten gains along with interest and penalties and to stop Kraken from operating as an unlicensed exchange. As opposed to It is their intention to vigorously defend their position in court, Kraken stated in a statement. The business claimed that the SEC's earlier attempt to classify cryptocurrency assets as securities was rejected by the courts. According to the statement, Kraken is not being sued for fraud, market manipulation, customer losses from compromised security or hacking, or breaches of fiduciary duty. A digression Kraken's problems with the SEC go back a long way. As part of a settlement with the SEC, Kraken consented to stop providing its staking services in February and to pay a $30 million penalty. Key Background The latest lawsuit filed by the SEC against cryptocurrency exchanges, Kraken (officially known as Payward Inc. and Payward Ventures Inc.), comes as the agency attempts to regulate the cryptocurrency industry. Chairman of the SEC Gary Gensler has long hinted that cryptocurrency would be subject to stricter regulation. He has suggested that many cryptocurrencies, not just bitcoin, should fall under federal securities laws and claimed that there was a lot of "fraud, scams, and abuse" in the market because there were no safeguards for investors. The cryptocurrency sector has resisted these attempts, claiming that the SEC is being unduly hostile and that the present securities laws are incompatible with cryptocurrencies. The SEC also filed lawsuits against Beaxy, Coinbase, and Binance this year. It accused Binance of misusing consumer funds and running an unlicensed exchange in the United States when it filed a lawsuit against the company in June. Another cryptocurrency trading platform, Beaxy, was shut down by the SEC in March after the agency filed charges against it for neglecting to register as an exchange and for allegedly having its founder steal money from users. In the meantime, the massive exchange FTX crashed last year, and earlier this month, Sam Bankman-Fried, the exchange's founder, was found guilty of fraud. Source link

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Long-term investors are hoarding bitcoin at historically high rates in the hopes that it will finally soar to new heights. Nevertheless, JPMorgan analysts noted on Wednesday that the factors causing cryptocurrency bullishness—like the upcoming halving of the coin and the approval of spot ETFs—might not have much of an effect on the token. They claimed that the recent surge in cryptocurrencies was "rather overdone." The first bitcoin spot ETF in the US appears to be getting approved by the SEC, as evidenced by the 32% increase in price of bitcoin over the previous month. Fund establishment is being spearheaded by major investors like Fidelity and BlackRock. Though proponents of cryptocurrency have hailed the ETFs as a means of introducing Wall Street's more conventional investors to bitcoin, JPMorgan analysts are skeptical that this would bring in new money for the market. Rather, the spot ETFs would draw investment from already-existing bitcoin products, like the bitcoin trust offered by Grayscale, as well as from upcoming ETFs and bitcoin mining firms that have a tendency to accumulate tokens. According to the note, we see this change as a relative value trade because many of the aforementioned bitcoin products are now trading at a premium or a significantly lower discount than they were in the past. Spot ETFs that are available in other nations have not drawn much interest from new investors, according to JPMorgan. Since its inception in 2021, the Purpose Bitcoin ETF—the largest physically-backed bitcoin fund—has exhibited low volatility. Another point raised by analysts was that the SEC's approval of spot ETFs, which it had previously contested in court, does not necessarily mean a total regulatory turnabout in favour of the cryptocurrency sector. The note stated that even though the SEC lost two court cases this year, Ripple v. SEC and Grayscale v. SEC, it is unlikely that the industry will see much less regulatory tightening in the future due to its lack of regulation. Regulations pertaining to the US crypto industry are still pending, and given the recent memory of the FTX scam, we do not think US lawmakers would change their minds in light of the aforementioned two court cases. The agency has been severely policing the industry under Chairman Gary Gensler, labelling it as full of "fraud" and "hucksters." The impending bitcoin halving cycle in April is also helping the cryptocurrency markets, regardless of what happens on Wall Street. As a result of this prearranged event, miners receive fewer tokens overall, which puts pressure on the supply going forward and spurs additional price growth. Although this has historically occurred at every bitcoin halving, according to JPMorgan, the price of the halving has already been factored into the current value of bitcoin. Source link