Kraken hit by unprecedented $1 billion Bitcoin withdrawals

U.S.-based crypto exchange Kraken has experienced ongoing withdrawals exceeding $1 billion in Bitcoin since Saturday.

Drawing attention from market observers, Kraken faces scrutiny over significant movements amid uncertainties and the impending Bitcoin halving in around 100 days, which is anticipated to impact cryptocurrency valuations significantly.

The large-scale transactions, varying between 400 to approximately 1,000 BTC each, have sparked discussions in the cryptocurrency space. More than 40 such transactions have been recorded, sparking speculation and discussions in the cryptocurrency space.

The crypto community is anticipating the SEC’s decision on Bitcoin ETFs, scheduled for January 10.

Alleged illegal operations in the U.S.

Previously, the SEC expanded its lawsuits against crypto exchanges. Amid its disputes with Binance and Coinbase, the SEC has targeted Kraken, accusing it of operating illegally in the U.S.

In its complaint filed in U.S. court, the SEC maintained that Kraken’s activities since 2013 have not complied with securities regulations for crypto assets.

This lawsuit marks a new chapter in the SEC’s enforcement actions against Kraken. The company previously faced SEC’s allegations in February 2023 for offering and selling crypto staking services to U.S. citizens.

At that time, Kraken agreed to comply with the charges. This involved ceasing the sale of staking services in the U.S. and paying a $30 million fine to settle the case.

However, the SEC did not include the points currently in progress. The SEC alleges that Kraken generated hundreds of millions of dollars since 2018 without complying with investor protection securities regulations.

Kraken is also mentioned to have poor internal control and record-keeping systems. In its complaint, the SEC accuses Kraken of commingling customer crypto assets amounting to billions of US dollars with its own assets to fund the company’s operations.

SEC believed that independent auditors have also determined that issues related to Kraken’s custodial asset recording resulted in material errors in the company’s financial statements for the periods 2020 and 2021.

Through its official statement in November 2023, Kraken delivered its disagreement with all SEC allegations. It refutes the SEC’s allegation that its business requires a special license due to digital assets being viewed as investment contracts, considering it legally inaccurate.

Leave a comment

My Newsletter

Sign Up For Updates & Newsletters