February 22, 2024

Kraken co-founder hails ‘more fair’ playing field as DOJ fines Binance

Kraken co-founder Jesse Powell has welcomed the result of the Binance investigation in an X (formerly Twitter) post and has highlighted the need for long-term-oriented visionaries and shareholders.

Over the last 12 months, leaders of major crypto exchanges, such as FTX and Binance, have come under federal scrutiny by United States government agencies for allegations ranging from misappropriation of investors’ funds to bypassing Anti-Money Laundering (AML) regulations.

According to Powell, the probes provide much-needed answers to How are they going so fast? and How are they getting away with it?

Powell sees Binance and former CEO Changpeng “CZ” Zhao’s legal proceedings as a positive move, as “going after the most egregious offenders offshore would require effort.” He stated that U.S.-based crypto businesses such as “Kraken, Coinbase and Ripple are all easy targets, sitting right in their back yard.”

Hinting at CZ’s recent admission that Binance violated AML requirements, Powell stressed the need to self-police to improve the industry’s reputation:

“Each dodgy operation represents an opportunity for governments to scapegoat crypto and tighten the noose.”

He further asked the community to cooperate to restore the image of the crypto ecosystem by recommending reliable services that “are playing the long game.” He also supported the idea of the Know Your Customer (KYC) requirement as long as it helps legally onboard new users to crypto.

Related: Crypto community responds to Kraken lawsuit, Deaton slams ‘dishonorable’ Gensler

Despite Kraken’s long-term approach, the U.S. Securities and Exchange Commission sued Kraken on Nov. 20 for allegedly commingling customer funds and failing to register with the regulator as a securities exchange, broker, dealer and clearing agency.

The lawsuit claims that crypto assets are securities contracts under U.S. law.

“Without registering with the SEC in any capacity, Kraken has simultaneously acted as a broker, dealer, exchange, and clearing agency with respect to these crypto asset securities.”

A Kraken spokesperson told Cointelegraph it disagrees with the SEC’s complaint and plans to defend itself in court. “It is disappointing to see the SEC continue down its path of regulation by enforcement, which harms American consumers, stunts innovation and damages U.S. competitiveness globally,” the spokesperson added.

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