In a recent X post, Jesse Powell, co-founder of Kraken, expressed his approval of the Department of Justice’s actions against Binance. Powell, a proponent of a long-term vision for the crypto industry, emphasized the importance of visionary leaders and stakeholders.
Crypto Exchanges Under Federal Scrutiny
Notably, over the past year, major crypto exchanges, including FTX and Binance, have faced investigations from U.S. government agencies. Allegations range from the misappropriation of investors’ funds to violations of Anti-Money Laundering (AML) regulations.
Powell’s Perspective on Legal Proceedings
Powell sees the legal actions against Binance and its former CEO, Changpeng “CZ” Zhao, as a positive development. He also believes that targeting offshore entities is challenging but necessary. Furthermore, he went on to state that U.S.-based exchanges like Kraken, Coinbase, and Ripple are more accessible targets for regulators.
Emphasizing the impact of questionable operations on the industry’s reputation, Powell called for community cooperation. He also urged users to recommend reliable services committed to the long-term growth of the crypto ecosystem. Powell supports Know Your Customer (KYC) requirements if they contribute to legally onboarding new users to crypto.
Kraken’s Legal Challenges
Despite Kraken’s long-term approach, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the exchange on Nov. 20. The SEC alleges that Kraken commingled customer funds and operated as a securities exchange, broker, dealer, and clearing agency without proper registration.
A spokesperson for Kraken expressed disagreement with the SEC’s complaint, stating the company plans to defend itself in court. The spokesperson criticized the SEC’s regulatory approach, describing it as “regulation by enforcement” and further highlighting its potential negative impact on consumers, innovation, and U.S. competitiveness globally.