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Wyoming’s crypto-friendly US Senator Cynthia Lummis voiced strong criticism against the Securities and Exchange Commission (<a href="https://en.coin-turk.com/crypto-investors-await-november-with-high-hopes-will-bitcoin-rise/”>SEC) following the lawsuit against Kraken. The legal action accuses the cryptocurrency exchange of operating as an unregistered securities exchange, broker, dealer, and clearing agency. This move comes after a lengthy investigation that gained momentum due to concerns about potential misconduct within the exchange, as reported in the February 9, 2023, reports.
Senator Lummis Calls for Regulatory Framework Amidst SEC Lawsuit
Reacting to the news about the Kraken lawsuit, Senator Lummis emphasized the need to move away from the SEC’s current approach of decision-making through sanctions. She highlighted that the repeated efforts of crypto asset companies seeking guidance from the SEC only resulted in punitive actions that unnecessarily harm consumers.
Senator Lummis called on Congress to pass a regulatory framework that provides clear rules for the SEC. She argued that these rules should distinctly define assets as securities or commodities. To address regulatory challenges in the crypto space, Senator Lummis, along with Kirsten Gillibrand, drafted the Responsible Financial Innovation Act earlier this year. The proposed legislation aims to categorize most crypto assets as commodities and provide a broader defined regulatory environment.
Kraken’s Legal Troubles: A Closer Look at the SEC Investigation
The SEC’s investigation into Kraken, initiated in February 2023, focuses on potential violations related to offering unregistered securities in the United States. The recent lawsuit alleges that Kraken engaged in illegal cryptocurrency trading activities and accumulated hundreds of millions of dollars. Despite operating as an exchange, broker, dealer, and clearing agency, Kraken continued its operations without registering with the SEC, as stated in the official complaint.
While this legal battle ensues, it is noteworthy that Kraken has a history of settling with the SEC. In February 2023, the exchange agreed to shut down its crypto staking service and pay a $30 million fine as part of the SEC’s broader pressure on individual investors regarding crypto staking. It remains to be seen if this new developing process will result in another penalty payment. SEC’s decision to pursue this lawsuit caught attention following rumors of a $4 billion agreement between Binance and the US Department of Justice.