Kraken’s Powell criticizes SEC’s ‘convenience-based’ enforcement actions in crypto industry Kraken’s Powell criticizes SEC’s ‘convenience-based’ enforcement actions in crypto industry
Jesse Powell argued that the enforcement action against Binance made the industry fairer.
2 min read
Updated: Nov. 23, 2023 at 12:57 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
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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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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In this article
Kraken
Kraken is a San Francisco-based digital asset exchange in euro volume and liquidity that trades various currencies, including Canadian dollars, US dollars, British pounds, and Japanese yen.
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Ripple
Ripple is a US-based technology company which develops the Ripple payment protocol and exchange network using XRP, the digital asset native to the XRP Ledger.
Bittrex
Founded in 2014 by three cybersecurity engineers, Bittrex is a global leader in the blockchain revolution.
Jesse Powell is an expert in virtual currencies, online/international payments and fraud, as well as co-founder and former CEO of Kraken, one of the most trusted and largest Bitcoin exchanges in the world with number one EUR market share.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.
