FCA Warns Kraken on their Alleged Illegal Operations in the UK
On 3rd March 2020, the Financial Conduct Authority (FCA) sent a warning against Kraken, the Us-based crypto exchange, following the allegations of illegally operating in the United Kingdom.
While responding to the allegations, Kraken.com claimed FCA was wrong to mention their name as the warning was supposed to target a scammer.
Kraken is highly acclaimed as the largest bitcoin exchange in liquidity and volume of transactions in Euros. it is the leading exchange for the BTC/EUR trading pair.
FCA’s Judgement on Kraken Might Have Been Impulsive
FCA’s statement, which was recently pulled down, stated that it is the only authority mandated to license any individuals and firms that offer financial services or products to people in the UK. It also added that Kraken is 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 any contact information that the FCA statement had mentioned.
Kraken further explained their innocence by stating that the said emails and phone numbers do not belong to them. They added that they don’t have numbers outside the usual company based ones, and the emails they use are exclusively @kraken.com, not the normal @gmail.com
Kraken stands on its truth that it was a case of mistaken identity, with the scammer using their brand name and details for his means.
Kraken’s Existing Legal Presence in the UK
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:
Powell expressed his liking of the introduction of the state of the art features and index products to potential clients. He added that in the coming times, the exchange will build teams to boost the development and expansions of such offerings. “We’ve got great stuff in store for traders and institutional clients in 2019.” he continued to air his views on Kraken’s achievements.
High Compliance Fees Spells War 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.