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Cryptocurrency exchange Kraken would be questioned by the Securities and Exchange Commission of the United States on whether it has contravened the rules relating to the supply of securities.
According to an article from February. 8 Bloomberg report, the probe relates to certain offerings that Kraken has made to U.S. clients. A person familiar with the issue stated that the probe is at an advanced stage and may reach a resolution within the next few days.
However, at this point, we do not know exactly what offers are being reviewed by the securities regulator.
When asked about the alleged investigation, a SEC spokesman told Cointelegraph, "The SEC does not comment on whether a possible investigation exists or does not exist."
Kraken's response to a request for comment was not immediate.
Gensler said in December that his main goal for regulating crypto throughout 2023 was to make crypto exchanges and lending platforms come into compliance, which he said could occur through firms registering with the SEC or through enforcement actions.
Related: Judge dismisses proposed class-action suit alleging COINBASE securities sales
Kraken CEO Dave Ripley argued in September that he didn’t see a need to register Kraken as an exchange with the SECbecause it does not offer securities, adding “There are not any tokens out there that are securities that we’re interested in listing.”
Chairman of the SEC Gary Gensler stated on several occasions, however, that he considers most cryptocurrencies other than Bitcoin () to be securities.
The second, however, was recently granted in Jan. 30 appeal hearing in the LBRY v SEC case that the sale of LBRY Credits (LBC) in the secondary market doesn’t constitute a security, after the judge was persuaded by an argument from attorney John Deaton highlighting that the courts had never deemed the underlying asset to be a security in similar cases.
The regulator often makes reference to the "appreciation test" to determine what is a security. The name comes from the 1946 Sec v Howey case, which set a precedent in the United States for dealing as securities.
The Commission has determined that a transaction is eligible as an investment contract—and is therefore regarded as a guarantee—when there is an investment in a joint venture whose profits are made exclusively by the work of others.
