Kraken Co-Founder Binance’s Historic Settlement Makes Cryptocurrency Fairer

Binance Co-Founder and Kraken Reach Historic Settlement, Paving the Way for Fairer Cryptocurrency Practices

Author: Timmy Shen, The Block; Translation: Song Xue, LianGuai

The co-founder of the cryptocurrency exchange Kraken has stated that despite “new threats to industry reputation constantly emerging,” Kraken is still “fighting the long game.” Just a few days ago, the US Department of Justice reached an historic criminal settlement with Binance, and the US Securities and Exchange Commission has just filed a new lawsuit against Kraken.

Kraken co-founder Jesse Powell wrote in a post on X, “It feels fairer today” when referring to Binance’s settlement agreement, in which the exchange will pay a $4.3 billion fine.

“We’ve answered two tough questions shareholders have been asking for the last 12 months: 1. how are they advancing so quickly? 2. how are they escaping penalties?” Powell wrote. “It’s hard to maintain confidence when your market share is shrinking and the only enforcement measure is targeting the good guys.”

• Who is the most popular person in the crypto social media? CZ, Buterin, SBF
• Chinese Power Provider Completes First Digital Yuan Smart Contract Transaction in Solar Power Industry
• What will Binance look like after the CZ era?

Powell added that new threats to the industry’s reputation continue to emerge. “Each crafty operation gives governments an opportunity to hunt for cryptographic scapegoats and tighten the noose. We can’t reasonably rely on protection arriving in time. We have to self-police.”

He also mentioned Coinbase and Ripple in the post, saying that Kraken and these companies are “easy targets” for the SEC, right in their backyard. “Pursuing the most egregious offshore violators takes effort. It’s not for protecting the people,” he continued.

In February this year, the SEC charged Kraken’s parent company with failing to register its offer and sale of cryptocurrencies in its asset-backed securities program. The parent company settled the charges by paying $30 million in “ill-gotten gains, prejudgment interest, and civil penalties.”

In another post following Monday’s lawsuit, Powell stated, “The message is clear: $30 million buys you around 10 months before the SEC tries to extort you again.” “Lawyers can do a lot with $30 million, but the SEC knows a real battle could cost over $100 million and valuable time. If you can’t afford it, get your crypto company out of the US war zone.”

In a blog post published earlier this week, Kraken pointed out that the SEC’s argument that its products are investment contracts is “legally incorrect, factually wrong, and a policy disaster.”

“As most securities law experts know, there is absolutely zero legal support for this position,” Kraken added. “The charges are baseless; there’s nothing like an exchange, broker-dealer, or clearinghouse operations that resemble investment contracts. The SEC is demanding compliance with a system that doesn’t exist.”

We will continue to update Blocking; if you have any questions or suggestions, please contact us!