Kraken co-founder says crypto ‘more fair’ after historic Binance settlement

Crypto exchange Kraken is “playing the long game” even as “new threats to the industry's reputation continue to emerge,” its co-founder said today — hot on the heels of the U.S. Department of Justice's historic criminal settlement with Binance and just days after the U.S. Securities and Exchange Commission filed a fresh lawsuit against Kraken itself.

In a post on X, Kraken co-founder Jesse Powell said the game “feels a bit more fair today” in reference to the Binance settlement, which will see the exchange pay a $4.3 billion fine.

“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 wrote. “It's hard to keep faith while your market share dwindles and the only enforcement that's happening is against the good guys.” 

Powell added that 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.”

He also brought up Coinbase and Ripple in his post, saying that Kraken and these firms were all the SEC’s “easy targets” sitting right in their backyard. “Going after the most egregious offenders offshore would require effort. It's not about protecting people,” he continued.

Ongoing dispute

In February, the SEC charged Kraken’s parent firms with failing to register the offer and sale of its crypto asset staking-as-a-service program. The parent entities settled the charges by paying $30 million in “disgorgement, prejudgment interest, and civil penalties.”

“Message is clear: $30m buys you about 10 months before the SEC comes around to extort you again,” Powell said in a separate post following the Monday lawsuit. “Lawyers can do a lot with $30m but the SEC knows that a real fight will likely cost $100m+, and valuable time. If you can't afford it, get your crypto company out of the U.S. warzone.”

In a blog post pubslihed earlier this week, Kraken pointed out that the SEC’s argument that its products were investment contracts was “incorrect as a matter of law, false as a matter of fact, and disastrous as a matter of policy.”

“As most securities law experts know, there is not a single law on the books supporting this position,” Kraken added. “The allegation is hollow; there is no such thing as an exchange, broker dealer, or clearing agency for investment contracts. The SEC is demanding compliance with a regime that doesn’t exist.”