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Kraken Receives $1.25 Million In Fines For Illegal Offerings

2 mins
Updated by Savannah Fortis
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In Brief

  • Kraken received a major fine from the U.S. Commodity Futures Trading Commission.
  • The platform allowed transactions which are normally off limits to U.S. based traders.
  • These fines come as U.S. regulators tighten their grip on the crypto space.
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The U.S.-based cryptocurrency exchange and bank Kraken received $1.25 million in fines for illegal trading activities. 

Kraken now has a fine of over a million dollars because of an incident of illegal trades of margin products. The transaction took place throughout a year’s time from June 2020 to July 2021. During this time, the exchange allowed transactions which are normally off limits to U.S.-based customers. 

According to the Commodity Futures Trading Commission (CFTC) Kraken also failed to enlist as a futures commission merchant. Vincent McGonagle the acting enforcement director for the CFTC reiterated the need for registration and regulation. “Margined, leveraged or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”

After Kraken received the fine the company did not deny or admit to them. Instead it settled the fine in full cooperation. The exchange also commented on its commitment to work with regulators and enforce rules for digital assets. 

Rules and Regulations

While Kraken’s latest fine is a result of operating outside of regulations, the company has a history of strict internal protocols. Earlier this year Kraken employees revealed the rigorous security regime which the company enforces. 

During the time period Kraken engaged in illegal trading activities, they also tightened KYC rules for U.S. margin trading customers. Nonetheless, the company’s activities elicited the attention of regulators. 

However, Kraken is not the only crypto-related venture fined by the SEC. According to data the crypto industry’s cumulative fines since the inception of Bitcoin is around $2.5 billion. Most recently the SEC hit Poloniex with $10 million in fines and BitConnect with $3.5 million. In addition, BitConnect must hand over 190 BTC. 

Nonetheless a lawyer from Kraken recently commented that compliance and cooperation is the only way to maneuver these new regulations.  

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Savannah Fortis
Savannah Fortis is a multimedia journalist covering stories at the intersection culture, international relations, and technology. Through her travels she was introduced to the crypto-community back in 2017 and has been interacting with the space since.
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