Kraken says SEC set to dismiss ‘politically motivated’ lawsuit against crypto exchange

The Securities and Exchange Commission has agreed to drop its lawsuit against Kraken, which sought to regulate the cryptocurrency company as a stock exchange, according to the company.

“Today marks a pivotal moment for Kraken. The SEC staff has agreed in principle to dismiss its lawsuit against Kraken with prejudice, with no admission of wrongdoing, no penalties paid and no changes to our business,” the company said in a statement.

This decision marks another sign of a shift toward a softer regulatory approach to crypto enforcement under the Trump administration.

The case against Kraken

The SEC originally sued Kraken in November 2023, accusing the company of operating as a broker, dealer, exchange, and clearing agency without proper registration.

The lawsuit also alleged that Kraken had commingled customer crypto assets and fiat currencies with its own, posing a “significant risk of loss” as identified by its independent auditor.

Kraken had already settled with the SEC once before, agreeing in February 2023 to stop offering crypto staking services in the US and pay $30 million in penalties.

However, the company later introduced a new staking product for US customers across 37 states and two territories in January 2024.

According to Kraken, the SEC plans to dismiss the lawsuit with prejudice, preventing the agency from refiling the same claims in the future.

The case will be dismissed without any admission of wrongdoing, penalties, or required changes to Kraken’s business operations.

The shift in US crypto regulatory landscape

Under Gary Gensler’s leadership, the SEC often took a regulation-by-enforcement approach, pursuing lawsuits and investigations against crypto companies like Coinbase, Uniswap, and OpenSea for various reasons.

This strategy faced criticism within the industry for hindering innovation and focusing on legitimate firms rather than bad actors.

The SEC’s recent actions may signal a shift in the US government’s stance on crypto. Kraken, discussing its case, stated, “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.”

It further added:

A stable, predictable regulatory framework will encourage responsible growth, attract investment and ensure the U.S. remains competitive in the global digital asset economy.

This move follows a broader trend of regulatory retreat in the crypto sector.

In addition to the Kraken case, the SEC has ended its investigations into Uniswap, Coinbase, Gemini, MetaMask, OpenSea, Tron Foundation, Robinhood, and others.

The regulator also faced a setback in a crypto case it had sought to pursue.

Currently, the Ripple XRP lawsuit remains the only major crypto case still active for the SEC.

The agency has indicated that its new crypto task force is working toward establishing a more comprehensive and clearer regulatory framework for digital assets.