Crypto: Regulators target another major platform
It’s starting to look like a coordinated attack.
Regulators appear to want to tighten the noose on the crypto industry, which has been asking them for clear rules for years. Federal agencies appear to have accused the industry.
The Department of Justice (DoJ) and the US Securities and Exchange Commission (SEC) announced charges on July 21 against a former Coinbase product manager, Ishan Wahi, and two others, accusing them of running an insider trading scheme that netted them more than $1.1 million .
Wahi allegedly tipped off his brother, Nikhil Wahi, and his friend, Sameer Ramani, about upcoming token listing announcements on the crypto exchange.
At the same time, the SEC delivered a powerful and heavy hammer blow to the entire industry by declaring that 9 of the 25 cryptocurrencies allegedly purchased under the scheme were securities. In other words, the nine tokens are subject to strict financial disclosures and transparency like shares in a company.
A few days later, Bloomberg News revealed that the SEC was also investigating Coinbase (COIN) – Get Coinbase Global Inc Report, which listed these tokens. The investigation focuses on the listing of digital assets that should have been registered as securities.
“[We] are confident that our rigorous due diligence process – a process the SEC has already undergone – keeps securities off our platform, and we look forward to working with the SEC on the matter,” Coinbase Chief Legal Officer Paul Grewal responded on Twitter on July 25.
He captioned the tweet: “Coinbase does not list securities. End of story.”
The Kraken is said to have violated US sanctions
We now learn that Coinbase is not the only cryptocurrency trading platform in the eyes of regulators. Kraken, another popular US exchange, is under investigation by the Treasury Department.
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The US Treasury Department’s Office of Foreign Assets Control has been investigating Kraken since 2019 on suspicion of violating US sanctions, according to the New York Times. Treasury is expected to impose a fine, but there is no timeline.
Kraken, which allows users to buy and sell more than 100 cryptocurrencies, reportedly allowed Iranians under sanctions to use the platform.
“Kraken does not comment on specific discussions with regulators,” Kraken legal director Marco Santori said in an emailed statement. “Kraken has robust compliance measures in place and continues to expand its compliance team to match business growth. Kraken closely monitors compliance with sanctions laws and generally self-reports potential issues to regulators.”
Treasury did not immediately respond to a request for comment.
The federal government has extended economic and financial sanctions imposed on certain countries and officials to the crypto industry. The US government is convinced that sanctioned entities and individuals can use cryptocurrency exchanges to circumvent sanctions.
The Treasury Department has previously sanctioned crypto exchange BitGo and transaction processor BitPay.
To avoid penalties, some firms are taking the lead themselves, such as OpenSea, the “Amazon” of non-fungible tokens (NFT), which blocked Iranian users this year. This is not the case with Kraken, a private company, which believes its mission is to democratize finance and not to use crypto as a “weapon”.
“Sometimes the hardest thing about having power is knowing when not to use it. Our mission is better served by focusing on individual needs above the needs of any government or political faction. The people’s money is an exit strategy for people, a weapons for peace, not war,” Kraken co-founder and CEO Jesse Powell wrote on Twitter last February.
“Furthermore, if we were to voluntarily freeze the financial accounts of citizens of countries that unjustly attack and incite violence around the world, step 1 would be to freeze all US accounts. As a practical matter, that’s not really a viable business option for us,” he added.
