Crypto exchange Kraken commingled customer and corporate funds while operating as an unregistered broker, clearing agency and dealer, the U.S. Securities and Exchange Commission (SEC) alleged in a new lawsuit Monday.
The federal regulator claimed that the San Francisco-based company violated federal securities laws in a repeat of its suits against other crypto trading platforms. Unique to Monday’s lawsuit are claims that Kraken created a “significant risk” by commingling up to $33 billion in customer crypto with its own corporate assets, the regulator said, quoting Kraken’s independent auditor.
“Similarly, Kraken has held at times more than $5 billion worth of its customers’ cash, and it also commingles some of its customers’ cash with some of its own,” the suit said. “In fact, Kraken has at times paid operational expenses directly from bank accounts that hold customer cash.”
The SEC claims that Kraken simultaneously operates an unregistered broker, clearinghouse and exchange echoes its complaints against Binance and Coinbase, two exchanges the agency sued earlier this year.
Those suits are continuing. The SEC previously settled similar allegations against Bittrex’s now-shuttered U.S. wing.
The federal regulator, as it has with those previous suits, listed a number of tokens it deemed to be unregistered securities, including the Algorand token (ALGO), Polygon’s MATIC and NEAR.
