Kraken co-founder Jesse Powell suggested that the U.S. Securities and Exchanges Commission (SEC) prioritized cases based on convenience, giving examples of the regulatory actions taken against U.S.-based entities like Coinbase, Ripple, and Kraken.
In a Nov. 23 statement on social media platform X (formerly Twitter), Powell said these regulatory actions reflect a localized enforcement approach rather than a genuine endeavor to protect consumers, as targeting overseas entities would require more effort. Powell wrote,
“Going after the most egregious offenders offshore would require effort. It’s not about protecting people.”
Over the past year, the SEC has filed significant legal actions against several U.S.-based crypto firms, alleging they violated federal securities laws with some of their operations. These actions have drawn several concerns from major stakeholders who believe that the regulation-by-enforcement approach could alienate firms operating within the industry.
The SEC’s approach has already resulted in some crypto firms, including Bittrex and Beaxy, shutting down, while others, like Ripple, Gemini, and Coinbase, have expanded their operations abroad.
Crypto industry ‘more fair’
Regarding the recent regulatory actions against Binance, Powell said the cryptocurrency industry “feels a bit more fair.”
“The last 12 months have answered 2 nagging questions from shareholders: 1. How are they going so fast? 2. How are they getting away with it?” Powell said.
On Nov. 20, Binance, the largest crypto exchange by trading volume, agreed to a more than $4 billion settlement with the U.S. authorities, with its founder Changpeng ‘CZ’ Zhao resigning as CEO after pleading guilty to money laundering charges.
The authorities, including the Commodity Futures Trading Commission (CFTC) and the Department of Justice (DOJ), detailed how the exchange violated several finance-related laws and failed to prevent transactions involving sanctioned users and individuals in restricted regions. The U.S. Treasury furthered that the settlement action was the largest in its history.
Kraken is playing the ‘long game.’
Powell concluded that Kraken and its shareholders are playing the “long game” with their compliance-first approach to the emerging industry.
The Kraken co-founder highlighted the emergence of new threats to the industry’s credibility and consequently stressed the importance of self-regulation as a preventive measure against further regulatory crackdowns.
According to him:
“New threats to the industry’s reputation continue to emerge. Each dodgy operation represents an opportunity for governments to scapegoat crypto and tighten the noose. We clearly cannot count on timely protection. We have to self-police.”
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