The Securities and Exchange Commission has dismissed its lawsuit against Kraken, the cryptocurrency exchange said in a blog post Monday.
The agency has dropped cases against several crypto firms of late, including Coinbase and Robinhood.
“The SEC’s decision to dismiss its lawsuit against us (and many others) is more than just a legal victory — it’s a turning point for the future of crypto in the U.S,” Kraken wrote. “It ends a wasteful, politically motivated campaign, lifts uncertainty that stifled innovation and investment, and clears the path toward a stable, forward-thinking regulatory regime.”
Leadership at crypto firms like Kraken long alleged that the Biden administration treated industry players unfairly, including through “regulation by enforcement” and a coordinated government effort to keep crypto away from the traditional financial sector.
The SEC sued Kraken in November 2023, arguing the exchange allegedly commingled billions of dollars in customer and corporate funds, and allegedly operated an unregistered exchange, broker, dealer and clearing agency.
Both parties were dealt partial wins in the case in January regarding what defenses Kraken would be permitted to use moving forward in the case.
But now, the case – which Kraken asserts “was always without merit” – won’t be moving forward at all.
“This case was never about protecting investors — it and other enforcement actions clouded instead of clarified. It undermined a nascent industry that repeatedly urged clear rules of the road,” Kraken wrote.
Kraken did not provide further comment on the case, including to an inquiry into how much the case cost the company. Coinbase spent $50 million on external legal fees alone in its battle with the commission, a spokesperson said last week. Coinbase’s SEC battle began roughly eight months before Kraken’s.
Responding to a post about an SEC investigation into a different company last week, Kraken founder Jesse Powell wrote on social media site X, “The investigation is the punishment. Just being under investigation puts you in the crosshairs of many other agencies, and makes you radioactive to business partners.”
“A fight with the SEC could cost you $100m if you win and 10x that if you lose,” Powell wrote.
Coinbase is filing a Freedom of Information Act request to figure out just how wasteful the SEC’s crypto enforcement work of the last four years has been, CoinDesk reported Monday.
“Let's get the facts on the table. Let's tally up what the costs were,” Coinbase Chief Legal Officer Paul Grewal told the outlet. “Let’s consider whether there were some benefits that ought to be measured as well. And then let's decide, is this what we want for our country and for our economy, and how do we craft rules to make sure that this doesn't happen again?”
The SEC declined to comment on the dismissal of its suit against Kraken.
