FCA Issues Haste Warning against Alleged Krakens’ Illegal Presence in the UK
- FCA issues warning against Kraken for alleged illegal financial operations in the UK
- Kraken claims it is a case of a mistaken identity involving a scammer
- Kraken already operates legally in the UK through FCA-registered London-based Crypto Facilities
On 3rd March 2020, the Financial Conduct Authority (FCA) published a warning against one of the earliest US-based crypto-exchanges Kraken, for allegedly operating illegally in the United Kingdom.
In response to the warning, Kraken.com claimed FCA wrongfully used their name as the warning was targeted at a scammer.
As the world’s largest bitcoin exchange in liquidity and volume of transactions in Euros, Kraken is the leading exchange for the BTC/EUR trading pair.
FCA Might Have Been Too Quick To Judge Kraken
In their statement, which has since been pulled down, the FCA stated that as the only authority mandated to license any individuals and firms that are offering financial services or products to the people in the UK, Kraken has yet to register with them:
“This firm is not authorized by us and is targeting people in the UK.”
FCA further clarified that Kraken’s financial services and products definitely fall under mandatory regulation, which the Crypto exchange is yet to acquire from them;
“Based upon information we hold, we believe it is carrying on regulated activities which acquire authorization.”
Shortly after the accusations, Kraken responded that the crypto-exchange did not recognize the contact information that accompanied the FCA statement:
“Those email addresses and phone numbers do not belong to our company. We do not have any outbound phone numbers, and all our employees use @kraken.com emails rather than @gmail.com.”
Kraken maintains that it was a case of mistaken identity with a scammer hiding behind their brand name and details.
Kraken Already Has an Established Legal Presence in the UK with Focus on Futures Trading
In their defense, Kraken also mentioned that Crypto Facilities, its futures platform, has been registered with FCA since April 2017.
The exchange acquired London-based crypto facilities last year in a deal worth $100 million. Kraken’s CEO, Jesse Powell, hoped to use the acquisition to significantly fast track Kraken’s efforts to obtain the necessary licensing to allow the exchange to operate in Europe and offer competitive prices. Powell stated:
“We are excited to introduce eligible clients to these industry-leading futures and index products. Over the coming months, our teams will continue to enhance and expand these offerings. We’ve got great stuff in store for traders and institutional clients in 2019.”
High Compliance Fees worsen Friction between Crypto Traders and Regulators
The FCA, which charges hefty fees to authorize crypto platforms’ access in the UK, is known for its firm policing on all cryptocurrency traders. In 2018, the regulatory authority suggested a complete ban of all crypto-backed derivatives, a case that is still pending to date.
Despite being based in San Francisco, Kraken complained last month about increasing compliance costs from regulatory authorities, with 61% of all requests coming from US regulatory authorities alone.
Featured image courtesy of Shutterstock. Source: Cryptopress.