Kraken CEO Hits Back At US Financial Regulators, Says They Support 'Bad Guys' In Crypto

Jesse Powell, the co-founder and exiting chief executive officer of the centralized cryptocurrency exchange platform Kraken, targeted U.S. financial regulators in his latest tweet and alleged that they support "bad guys" in the cryptocurrency industry.

Kraken, the CEX that Powell lead, agreed to pay $30 million in disgorgement, civil penalties and prejudgment interest to the SEC on Feb. 9 and immediately ceased to offer its crypto staking program for its U.S. clients after the regulator charged that the exchange failed "to register the offer and sale of their crypto-asset staking as a service program, whereby investors transfer crypto assets to Kraken for staking in exchange for advertised annual investment returns of as much as 21 percent."

After the settlement with the SEC, Powell seemed to have regretted his decision and later joked about it in a tweet while urging Congress to "act to protect the domestic crypto industry and US consumers who will now be going offshore to obtain services no longer available in the US."

But, his latest tweet, which he claimed is a theory, alleged that "Regulators let the bad guys get big and blow up because it serves their agenda."

Powell enumerated regulators' agenda, which includes "destroy capital/resources in the crypto ecosystem, burn people, deter adoption" and "give air cover to attack good actors," noting that the "good guys" are the enemy.

"If the bad guys can run long enough without blowing up, they might just kill the good guys for you," Powell said in another tweet, adding that "Bad guys operate with huge competitive advantages. They suck up users, revenue and venture capital that would otherwise have gone to good guys."

Further, Powell claimed that "BG [bad guys] can always be jailed later."

Aside from the SEC's charges, the U.S Internal Revenue Service (IRS), filed a court petition on Feb. 9, just minutes after the SEC's announcement about the platform, to enforce an unanswered 2021 summons to Kraken, requesting information on the exchange's customers to determine their tax liabilities.

"Despite discussions between the parties, Payward Ventures Inc. [one of the registered companies that make up Kraken] & Subsidiaries has failed to comply with the summons and has not produced the books, records, papers, and other data demanded in the summons. Payward Ventures Inc. & Subsidiaries' failure to comply with the summons continues to this date," the IRS' petition read.

But a Kraken spokesperson said they are aware of the request but would like to maintain its principles of safeguarding its clients' privacy and security.

"One of Kraken's guiding principles is maintaining the security and privacy of its client accounts. We understand that the Court has expressed concern over the scope of the Summons. The posture of this case has not previously given Kraken an opportunity to weigh in. We look forward to addressing our concerns to the Court," the spokesperson noted.