The co-founder of cryptocurrency exchange Kraken, Jesse Powell, has hailed the US Department of Justice (DOJ) for the crackdown on Binance and its CEO Changpeng Zhao (CZ).
Powell Acknowledges Federal Scrutiny
Kraken co-founder Jesse Powell has expressed approval of the recent actions taken against Binance by the U.S. Department of Justice (DOJ). Powell's perspective sheds light on the challenges faced by the crypto industry and the need for regulatory actions.
In the past year, major crypto exchanges, including FTX and Binance, faced federal scrutiny for alleged misconduct, from misappropriation of funds to violating Anti-Money Laundering (AML) regulations. Powell suggests that these investigations answer critical questions about the rapid growth and practices within the industry.
“How Are They Going So Fast?”
On Thursday, November 23, Powell shared his perspectives on the Binance controversy, including its former CEO Changpeng "CZ" Zhao and the involvement of the U.S. Department of Justice. Powell contends that the recent legal actions against Binance have finally provided answers to questions surrounding the exchange's operations and its ascent to prominence in the cryptocurrency market.
He writes,
“The game feels a bit more fair today. 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? "Trust me, any day now..." is only believable for so many years. It's hard to keep faith while your market share dwindles and the only enforcement that's happening is against the good guys.”
The Binance Investigation
Powell welcomes the legal proceedings against Binance and its former CEO Changpeng "CZ" Zhao, seeing it as a positive step. He acknowledges the effort required to go after offshore entities and points out that U.S.-based exchanges like Kraken, Coinbase, and Ripple are more accessible targets.
Powell criticizes Binance's no-KYC (Know Your Customer) practice, deeming it unsustainable for any major exchange. He underscores the importance of self-policing within the industry, especially in light of Binance's admission of violating AML requirements.
Emphasizing the need for the crypto community to cooperate, Powell urges users to recommend reliable services that play the "long game." He supports the KYC requirement if it facilitates the legal onboarding of new users to the crypto ecosystem.
Kraken's Legal Challenges
Despite Kraken's commitment to a long-term approach, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Kraken on Nov. 20. The SEC alleges that Kraken commingled customer funds and failed to register as a securities exchange, broker, dealer, and clearing agency.
A Kraken spokesperson disagrees with the SEC's complaint and plans to defend the exchange in court.
Powell criticizes the SEC's focus on smaller-scale entities like Kraken, Ripple, and Coinbase, suggesting an oversight of more significant wrongdoers in the industry. He questions the SEC's prioritization based on convenience rather than the severity of offenses, claiming it contradicts the commission's mandate to protect the people.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
