SEC to drop lawsuit against Kraken

The U.S. SEC has agreed to dismiss its lawsuit against cryptocurrency exchange Kraken.

Kraken announced that the U.S. Securities and Exchange Commission plans to dismiss the case with prejudice, meaning the agency cannot bring the same claims again.

As a result, the lawsuit will be dropped without any admission of wrongdoing, penalties, or modifications to Kraken’s business operations.

“The SEC’s lawsuit, which mischaracterized our consistent business model, was always without merit,” wrote Kraken. “This dismissal confirms what we’ve said all along: Regulatory actions must be based on facts, not political agendas.”

Background on the lawsuit

The SEC sued Kraken in November 2023, alleging the company operated as an unregistered securities exchange, broker, dealer, and clearing agency. The lawsuit also accused Kraken of commingling customer funds with its own, creating a risk of financial loss for users. 

This legal action followed Kraken’s earlier settlement with the SEC in February 2023, when the company agreed to discontinue its staking service in the U.S. and pay $30 million in penalties.

Kraken has maintained that it did not violate securities laws and has criticized the SEC’s approach as unfair and unclear.

SEC’s shift in policy

The dismissal of the lawsuit is part of a broader trend. In recent weeks, the SEC has dropped cases against Coinbase and Consensys, two other major players in the cryptocurrency space. 

The agency recently announced that a new task force is working to establish clearer regulatory guidelines for crypto assets.

The SEC has long taken a strict stance on crypto, arguing that many digital assets qualify as securities under U.S. law. Under Chair Gary Gensler, the agency has pursued legal action against multiple exchanges, including Binance, Coinbase, and Ripple, alleging violations of securities regulations. 

By dropping the Kraken lawsuit, the SEC appears to be signaling a shift in strategy. Rather than relying on lawsuits to define crypto regulations, the agency may be moving toward creating explicit policies.

“Today’s decision is a step toward a more inclusive financial system — one where individuals, not government overreach, shape their own economic futures,” wrote the exchange. “By embracing crypto innovation, the U.S. can unlock new avenues for economic prosperity and financial freedom.”