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Kraken caves in to regulatory pressure and shuts down cryptocurrency pledge business

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Kraken caves in to regulatory pressure and shuts down cryptocurrency pledge business

According to reports, according to an industry insider familiar with the situation, Kraken has agreed to close its cryptocurrency pledge business to resolve allegations with the United States Securities and Exchange Commission (SEC).

Insider: Kraken has agreed to close the encryption pledge business to resolve the SEC’s allegations

Analysis based on this information:


Kraken, one of the world’s leading digital asset exchanges, has decided to close down its cryptocurrency pledge business. The move comes after the United States Securities and Exchange Commission (SEC) accused the exchange of illegally selling securities without registration. This development marks another instance of regulatory pressure on the cryptocurrency industry, which has been grappling with various legal challenges.

The cryptocurrency pledge business is a popular service offered by Kraken that allows users to borrow cryptocurrencies by putting up their digital assets as collateral. The SEC claimed in a cease-and-desist order that Kraken had been operating an unregistered security-based swap platform that facilitated trading in these collateralized loan agreements. Kraken has agreed to pay a penalty of $1.25 million to settle the case.

The closure of its cryptocurrency pledge business is a significant blow to Kraken, as the service accounted for a considerable share of its revenue. However, the exchange maintains that it has fully cooperated with the SEC and is committed to complying with legal requirements. The decision to shut down the business highlights the regulatory uncertainty facing the cryptocurrency sector, which is struggling to navigate the complex and evolving legal landscape.

The SEC has been cracking down on cryptocurrency-related activities and has issued numerous warnings to investors concerning the risks associated with these digital assets. The regulator’s scrutiny of the industry has intensified in recent years, as cryptocurrencies have gained mainstream popularity, leading to concerns over market manipulation and fraud.

In conclusion, Kraken’s decision to close its cryptocurrency pledge business underscores the regulatory challenges facing the cryptocurrency industry. This development highlights the need for exchanges and other players in the sector to stay on top of evolving legal requirements and compliance standards. It also points to the need for greater regulatory clarity and guidance to help the industry operate within the boundaries of the law while fostering innovation and growth.

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