The United States Securities and Exchange Commission (SEC) is probing major American crypto exchange Kraken over its unregistered securities offerings to U.S. investors.
The investigation has gotten to an advanced stage, and Kraken will likely settle with the SEC in the coming days, Bloomberg reported Wednesday, citing people familiar with the matter.
According to the report, the regulator is investigating whether the crypto exchange broke securities laws in its offerings to American customers. The case has not been made public, so the tokens and offerings under scrutiny are unknown.
Settling the regulator could make other crypto firms reach out to the SEC for registration deals, as the agency has always advised.
In December, while speaking with Bloomberg, SEC Chair Gary Gensler urged crypto firms to register with the securities watchdog as the runway was getting shorter.
Gensler’s firm belief is that almost all crypto assets besides bitcoin are securities. He reiterated that most crypto exchanges offer unregistered securities, thus violating federal laws.
Kraken’s issue with the SEC is not the exchange’s first rodeo with U.S. regulators. Late last year, the company settled with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) for helping users in Iran evade sanctions against them.
The OFAC discovered that Kraken processed roughly $1.68 million in 826 transactions to Iran users despite U.S. sanctions. As reported by CryptoPotato, the crypto exchange agreed to settle the case with a fine of over $362,000 and an additional $100,000 for sanctions compliance controls. The fine could have amounted to over $272 million but was reduced thanks to Kraken’s compliance.
Meanwhile, the exchange has joined a growing list of crypto companies under regulatory probes by the SEC over securities offerings. The list includes Coinbase, whose former employee was indicted alongside two others for an insider trading case.