Jesse Powell, the co-founder of the cryptocurrency exchange Kraken, has openly criticized the Securities and Exchange Commission (SEC) in light of the recent lawsuit against his company. In a bold statement on X, Powell condemned the SEC’s actions and advised crypto businesses to consider exiting the U.S. market.
SEC’s lawsuit against Kraken sparks controversy
On November 20, the SEC filed a lawsuit against Kraken for multiple alleged violations of securities laws. The regulatory body claimed Kraken had improperly mixed client and company funds and failed to register as a securities broker. This move follows a $30 million settlement in February, where Kraken was charged with failing to register its crypto asset staking-as-a-service program and agreed to cease offering these services in the United States.
Powell’s response, articulated through a post on X on November 21, was marked by strong criticism of the SEC, which he termed “USA’s top decel,” a phrase commonly used in tech circles to describe entities hindering progress. He expressed his dissatisfaction with the SEC’s approach and implied that the regulatory body is using its power to extort money from companies in the crypto sector.
Kraken’s stance and response to allegations
Following the lawsuit, a Kraken representative described the SEC’s complaint as “disappointing” and indicated that the exchange is prepared to defend itself in court. Kraken’s blog post on November 20 rebutted the SEC’s allegations of commingling funds, stating that the issue was no more than the exchange utilizing fees it had already earned. The company also denied any loss of customer funds.
In his post, Powell suggested that the cost of a legal battle with the SEC could exceed $100 million, which could be prohibitive for many firms in the industry. This financial burden and the SEC’s aggressive posture led Powell to advise other crypto companies to consider relocating their operations outside the United States.
Powell’s statements highlight a growing tension between cryptocurrency firms and U.S. regulatory agencies. The SEC’s increased scrutiny of the crypto industry raises questions about the future of such businesses in the U.S. market. Powell’s advice to exit the U.S. “warzone” reflects a sentiment shared by some in the industry who feel that the regulatory environment in the United States is becoming increasingly hostile to crypto enterprises.
This situation has broader implications for the global crypto market, as the United States has been a significant player. The departure of key companies from the U.S. could shift the crypto industry’s geography, with firms seeking more favorable regulatory climates.
