Kraken has announced its acquisition of Coin Meester (BCM), one of the Netherlands’ oldest registered crypto brokers, according to a Sept. 24 statement.

This move aims to strengthen Kraken’s presence in the Dutch market and also expand its business reach with virtual asset service provider (VASP) licenses in France and Poland.

Brian Grahan, Kraken’s managing director for Europe, said:

“We are one of the very few in Europe that can combine global scale with a compliant offering and a superior client experience. Our clients stand to benefit as we empower them with the premium trading and investing experiences needed to unlock crypto’s full potential.”

Kraken secured its VASP registration from the Dutch Central Bank (DNB) in February.

European expansion

This acquisition is timely as the European Union’s Markets in Crypto-Assets Regulation (MiCA) takes effect in December.

The MiCA regulation aims to create a regulated digital asset environment that protects crypto users while promoting innovation. The framework will streamline operations across EU member states, making it easier for businesses to navigate regulations under one unified framework.

In preparation for MiCA, Kraken has accelerated its expansion across Europe over the past two years. The company now offers regulated VASP services directly or through partnerships in countries such as Germany, Spain, Italy, Belgium, Ireland, France, Poland, and the Netherlands.

Kraken’s managing director for Europe, Brian Grahan, noted that its latest move marks a key milestone in the firm’s European expansion efforts. He stated:

“The completion of the BCM acquisition is a key milestone in our European expansion, allowing us to leverage our strong footprint and market-leading position in euro volume and liquidity to significantly grow our market share in the years ahead.”

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Kraken has requested a jury trial in response to the US Securities and Exchange Commission’s (SEC) lawsuit, according to a Sept. 12 court filing.

The move comes after a federal judge rejected Kraken’s bid to dismiss the case, which centers on claims that the platform operated an unregistered securities exchange.

Kraken’s defense

In its filing, Kraken denied any illegal activity and criticized the SEC’s approach to the crypto industry.

The exchange highlighted its attempts to engage with the regulator, which was met with resistance. It stated:

“Kraken has tried to work with the SEC to make registration feasible. But the industry’s efforts have been stonewalled at every step, as the SEC has instead chosen to pursue a strategy of fighting with its sister regulators for enforcement authority its Chair admitted it did not have.”

Further, Kraken claims it was unaware of which digital assets the SEC considered “investment contracts” until the lawsuit was filed. The regulator labeled these digital assets traded on the crypto platform as securities: ADA, ALGO, ATOM, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG, and SOL.

Kraken also disputed the SEC’s term “crypto asset securities,” arguing that the courts have already rejected it. It stated:

“The SEC has pointed to no transactions where investment contracts were allegedly formed on Kraken. The digital assets themselves cannot be the investment contracts because they carry none of the rights and obligations of a share of stock, a bond, or any other financial asset that Congress has said is subject to SEC regulation.”

As a result, Kraken firmly denied that it engaged in any illegal activity.

Challenges SEC’s authority

Kraken also questioned the SEC’s authority to regulate its business under certain sections of the Securities Exchange Act. The exchange argued that digital assets do not qualify as securities or investment contracts, and therefore, trading these assets on Kraken does not violate the Exchange Act.

Additionally, Kraken claimed that the SEC failed to provide adequate notice that its actions were unlawful, violating the exchange’s due process rights.

Its legal team argued:

“Due to the lack of clarity and fair notice regarding Kraken’s obligations under the law, in addition to the lack of clarity and fair notice regarding Plaintiff’s interpretation of the law, Kraken lacked fair notice that its conduct was prohibited.”

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Blockchain analytical firm Arkham Intelligence reported that crypto custodial service provider BitGo moved $2 billion of Mt. Gox’s Bitcoin to a new wallet, “bc1qpn,” according to an Aug. 13 post on X.

Currently, the wallet holds 33,023 Bitcoin, valued at $1.96 billion, following recent market fluctuations that have pushed BTC’s value to below $60,000 as of press time.

Test transactions

Earlier today, the BitGo wallet had executed a test transaction of $5.88 more than two weeks after receiving $2.19 billion in Bitcoin from the defunct Mt. Gox.

Arkham suspects the initial wallet — identified as bc1q26 — belongs to BitGo, the final exchange tasked with distributing funds to Mt. Gox creditors.

Market observers believe the test transaction could kickstart the firm’s repayment process for Mt. Gox creditors. Notably, other firms selected for the creditor distributions, including Kraken and Bitstamp, had received and distributed the funds to creditors of the failed Japanese exchange.

Meanwhile, several of Mt Gox’s creditors using BitGo have reported receiving their digital assets—BTC and Bitcoin Cash—in their accounts. However, they stated that withdrawal involves a video verification process.

BitGo, however, has yet to acknowledge receipt of the Mt. Gox Bitcoin publicly and has not responded to CryptoSlate’s request for comment as of press time.

According to Arkham data, Mt. Gox addresses currently hold 46,000 BTC, equivalent to $2.75 billion as of press time.

Mt. Gox bankruptcy

Mt. Gox, once the world’s largest crypto exchange, filed for bankruptcy in February 2014 following a hacking event that resulted in the loss of up to 950,000 bitcoins, valued at over $58 billion today.

This began a decade-long process impacted by several legal processes and delays. However, the Mt. Gox Trustee began repaying the firm’s creditors in July and has distributed Bitcoin and Bitcoin Cash to over 17,000 creditors as of July 31.

Market observers believe that the Mt. Gox repayments are a significant event for the crypto industry as it removes one of the significant barriers holding BTC’s price down. Blockchain analytical firm Glassnode stated:

“From a psychological perspective, this represents the final chapter in a major market overhang over the industry since 2013.”

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Bankrupt Mt. Gox continued its Bitcoin transfers this morning by moving 37,477 BTC, equivalent to $2.47 billion, to an untagged address, 12Gws9, according to data from Arkham Intelligence.

The dashboard shows that the firm moved 5,106 BTC through a cold wallet to another untagged address beginning with 1MzhW.

Market observers said these transactions are part of Mt Gox’s effort to repay creditors. The firm began repaying creditors impacted by its 2014 collapse earlier this month and committed to paying over $9 billion in BTC.

Meanwhile, these latest transfers follow the failed firm movement of about $2.8 billion BTC to a new address on July 23. Of this amount, Arkham reported that Mt. Gox shifted  5,110 BTC, worth $340.1 million, to four separate Bitstamp addresses.

Blockchain analytical platform Lookonchain said the defunct exchange had moved 52,549 BTC, worth $3.31 billion, to three centralized crypto exchanges, including Bitstamp, Kraken, and Bitbank, since July 5. The three crypto platforms are among the five exchanges working with the Mt. Gox trustee to return creditors’ funds.

Despite its consistent Bitcoin movement, Mt. Gox still holds more than 90,000 BTC, estimated to be worth $5.97 billion, according to Arkham Intelligence data.

Kraken completes repayments

In a parallel development, Kraken said it successfully distributed the Bitcoin and Bitcoin Cash from the Mt Gox estate back to creditors.

On July 23, Kraken CEO Dave Ripley said:

“While frivolous lawsuits got in the way of earlier payments, we are extremely grateful to the Trustee for keeping the coins safe and HODLing the vast majority of BTC all this time. The preservation of value is exemplary and is surely appreciated by all creditors.”

The Kraken repayment was completed around a week after the firm confirmed receipt of the Mt. Gox creditors’ funds.

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Kraken founder Jesse Powell said he donated $1 million, mainly Ethereum, to support former US President Donald Trump‘s re-election bid.

In a June 28 statement, Powell explained that the donation was meant to help the US maintain its leadership in blockchain technology. He said:

“I am excited to join other leaders from our community to unite behind the only pro-crypto major party candidate in the 2024 Presidential election so the United States can continue to remain a leader in blockchain technology.”

Powell’s social media post also included a “#freeross” hashtag about Ross Ulbricht, the convicted founder of the darknet marketplace Silk Road. Interestingly, Former President Trump has vowed to pardon Ulbricht if he returns to office.

Slams Biden

Meanwhile, the Kraken founder criticized President Joe Biden‘s approach to the emerging industry.

According to Powell, Biden’s administration has allowed “a campaign of unchecked regulation by enforcement” to thrive, impacting US competitiveness in the global space. He stated:

“For too long, the crypto industry has been under attack by Elizabeth Warren, Gary Gensler and others. Despite overwhelming bipartisan Congressional efforts to put clear rules in place, the Biden White House has stood by and allowed a campaign of unchecked regulation by enforcement.”

Trump’s re-election chances

Powell is the latest notable figure from the crypto industry to endorse Trump publicly.

The former President has recently taken a more favorable stance toward crypto, pledging to support the industry and end the Biden administration’s “war on crypto” if elected.

These actions seem to be boosting Trump’s re-election efforts. Polymarket, a popular crypto-based prediction platform, shows his chances rising to about 65% after the first presidential debate of the 2024 election season. Meanwhile, Biden’s chances of exiting the race have spiked to 43%.

Macroeconomics outlet the Kobeissi Letter stated:

“The odds of President Biden winning the 2024 Democratic nomination are down by 24% in 2 HOURS. Prior to the debate, markets saw an 86% chance that Biden would win the nomination. Now, there’s a 38% chance that he WON’T be nominated as the Democratic candidate.”

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Crypto exchange Kraken reported that a rogue security research company has unilaterally held on to $3 million in digital assets they exploited from a bug on its platform.

Kraken’s Chief Security Officer Nick Percoco detailed the incident on X, revealing that on June 9, the company received an anonymous tip from a “security researcher” about a critical bug affecting its funding system.

The bug

According to Percoco, the flaw, stemming from the exchange’s recent UX change, would allow a malicious actor to inflate their account balances artificially. He explained:

“Our team identified a flaw from a UX change that credited accounts prematurely, allowing users to trade in real time before asset clearance. This change was not adequately tested against this specific vulnerability… [So,] a malicious attacker could effectively print assets in their Kraken account.”

After fixing the bug, Kraken found that three accounts had exploited this flaw within a few days. Percoco disclosed that the security researcher had shared the information with two associates, who subsequently withdrew nearly $3 million from Kraken’s treasury.

Extortion?

Percoco stated that Kraken contacted these individuals for a full report and to return the withdrawn funds.

However, these requests were ignored. Instead, the researchers demanded a speculative sum for the potential damages the bug could have caused if undisclosed.

Percoco condemned these actions as unethical and criminal, stating:

“As a security researcher, your license to ‘hack’ a company is enabled by following the simple rules of the bug bounty program you are participating in. Ignoring those rules and extorting the company revokes your ‘license to hack.’ It makes you, and your company, criminals.”

Consequently, Kraken is now treating this incident as criminal and is working with law enforcement authorities.

Kraken has yet to respond to CryptoSlate’s request for additional commentary as of press time.

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Kraken has refuted the Securities and Exchange Commission’s (SEC) claims that its platform listed securities, pointing out that the financial regulator’s arguments attempt to restructure the US financial system beyond its regulatory scope, according to a May 9 court filing.

Investment contract

Kraken stated that the SEC could not pinpoint tradable investment contracts on its platform. Instead, the Gary Gensler-led commission was using terms like investment “concept” and “ecosystem” as substitutes for “investment contract” and “enterprise.”

Kraken lawyers wrote:

“Kraken does not trade, broker, or settle ‘concepts’ or ‘ecosystems.’ The SEC never plainly alleges that what actually is traded, brokered, and settled on Kraken is itself an investment contract. This failure spotlights the fundamental problem with the SEC’s case.”

The crypto-trading platform continued that the digital assets on its platform are not securities, adding that the SEC’s “argument could transform the sale of any digital asset (or any commodity) into an investment contract whenever the agency wishes it so—simply by claiming there is promotion of some surrounding ‘ecosystem.’”

Furthermore, Kraken argued that the SEC’s action could result in a “significant reordering of the US’s financial regulatory structure” and should be “debated in Congress, not in the courts.”

It added:

“The SEC’s assertion that it can regulate all ‘investment concepts’ and ‘ecosystems’ is the type of agency power grab that the Supreme Court has held runs afoul of the major questions doctrine.”

Securities battle

Kraken’s case is among the several lawsuits in which the SEC is currently embroiled, all revolving around the definition of securities.

The financial regulator has consistently argued that several digital assets meet the definition of securities under the Howey Test.

In a filing, the SEC lawyers contended that “crypto assets are not the first technological innovation to interest securities markets,” citing a recent Court rejection of Coinbase’s argument about how its operations did not violate federal securities law as evidence that the sectors “fall comfortably within the framework that courts have used to identify securities for nearly eighty years.”

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It’s official: Kraken, a popular crypto exchange, has finally launched its NFT marketplace. To inaugurate it, the platform offered over 250 unique collections of non-fungible tokens. 

Below are all the details. 

Kraken NFT marketplace: no gas fees for users 

Kraken, a centralized exchange based in San Francisco, has finally made its NFT marketplace available. As anticipated, the marketplace was launched with a wide selection of more than 250 unique NFT collections.

In addition, a distinctive feature of the new marketplace is the no-transaction-fee experience: when buying or selling a digital asset on the platform, users will not be charged gas fees on transactions. 

And this is true regardless of market conditions. However, gas fees will be charged for transferring digital assets in and out of the platform.

Kraken’s NFT marketplace has been under development for over a year, with the launch of a public beta version of its testnet in November last year. During the beta phase, the marketplace supported NFT collections of Ethereum and Solana. 

With its public launch, the marketplace expanded its offerings to include Polygon digital collectibles. These include popular items such as “red-hot Reddit collectible avatars.”

Kraken: it will be a user-friendly marketplace even for non crypto experts 

Among other new features, we see that Kraken’s proposed NFT marketplace also aims to be user-friendly for inexperienced cryptocurrency traders. 

As we know, most NFT platforms currently require users to have a crypto wallet to purchase digital collectibles. 

However, Kraken’s platform differentiates itself by accepting both fiat and cryptocurrencies, allowing users to bid on an NFT even if they do not have any tokens.

For those with crypto wallets, Kraken’s NFT marketplace currently supports MetaMask and Phantom, with future plans to also connect to WalletConnect.

Importantly, Kraken’s decision to launch its NFT platform comes at a time when the U.S. government is tightening its grip on centralized exchanges. 

Indeed, competition in the NFT market remains fierce, with industry giants such as OpenSea and Blur dominating the space.

SEC charges against Coinbase: is it war against centralized exchanges? 

As mentioned earlier, the Securities and Exchange Commission (SEC) recently filed a lawsuit against Coinbase, one of the industry’s leading exchanges, a day after suing Binance. 

In the lawsuit, filed on 6 June, the SEC alleges that Coinbase acted as an unregistered exchange. Specifically, the SEC sued Coinbase and its holding company, CGI, as defendants in the lawsuit, which states: 

“Since at least 2019, through the Coinbase platform, Coinbase has operated as an unregistered broker, including soliciting potential investors, managing client funds and assets, and charging transaction-based fees.”

In addition, the SEC alleges that the staking services offered by Coinbase violate the Securities Act of 1933 because the staking program involves five cryptocurrencies that represent an investment contract and thus a security. 

Thus, the SEC alleges that Coinbase failed to ensure that the cryptocurrencies sold were not considered securities under the Howey test.

Unfortunately, this lawsuit is just the latest development in the ongoing battle between Coinbase and the SEC. Earlier this year, Coinbase received a Wells notice from the SEC, which led Coinbase to sue the SEC seeking regulatory clarity.

After the court ordered the SEC to respond, the regulator said that Coinbase cannot seek regulatory clarity.

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