In a lawsuit filed on Monday, the Securities and Exchange Commission alleges that Kraken, currently the third-largest crypto exchange by spot-market trading volume, failed to register its services with the agency in violation of U.S. securities law.
The lawsuit comes less than a year after the SEC settled with Kraken over its crypto-staking business, with the exchange agreeing to pay a $30 million fine and end the service in the U.S. The initial complaint drew industry pushback, with Coinbase CEO and cofounder Brian Armstrong tweeting that "regulation by enforcement" doesn't work.
