Kraken co-founder Jesse Powell has publicly expressed his approval of the recent investigation into Binance, a major cryptocurrency exchange, in a post on the X social media platform (formerly known as Twitter).
Powell emphasized the importance of having long-term-oriented visionaries and shareholders in the crypto industry.
Over the past year, leaders of prominent cryptocurrency exchanges like FTX and Binance have faced scrutiny from U.S. government agencies over allegations that range from misusing investors’ funds to circumventing Anti-Money Laundering (AML) regulations.
Powell believes that these investigations offer crucial answers to questions like “How are they growing so rapidly?” and “How are they avoiding consequences?”
Powell views the legal proceedings against Binance and its former CEO, Changpeng “CZ” Zhao, as a positive development.
He believes that going after the most egregious offenders operating offshore requires significant effort.
He pointed out that U.S.-based crypto businesses like Kraken, Coinbase, and Ripple are more accessible targets for regulatory scrutiny, as they operate within the United States.
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In light of CZ’s recent admission that Binance violated AML requirements, Powell emphasized the need for self-regulation to enhance the crypto industry’s reputation.
He stated that every illicit operation provides governments with an opportunity to cast a negative light on the entire crypto ecosystem.
Powell urged the crypto community to collaborate in restoring the industry’s image by endorsing reliable services that prioritize a long-term approach.
He also expressed support for the Know Your Customer (KYC) requirement, as long as it facilitates the legal onboarding of new users to the crypto space.
Despite Kraken’s commitment to a long-term perspective, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Kraken on November 20th.
The SEC alleges that Kraken commingled customer funds and failed to register as a securities exchange, broker, dealer, and clearing agency, arguing that crypto assets fall under U.S. securities law.
A spokesperson for Kraken contested the SEC’s complaint and stated the company’s intention to defend itself in court.
The spokesperson expressed disappointment in the SEC’s approach, characterizing it as “regulation by enforcement,” which they believe harms American consumers, stifles innovation, and damages the global competitiveness of the United States.
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