Kraken, one of the largest U.S.-based cryptocurrency exchanges, announced that the U.S. Securities and Exchange Commission (SEC) has agreed in principle to drop its lawsuit against the firm, a decision the company hailed as a “turning point for the future of crypto in the U.S.” The dismissal, pending approval from SEC commissioners, comes with no admission of wrongdoing, no penalties, and no operational changes for Kraken, according to a company blog post. This retreat marks a significant pivot from the SEC’s aggressive enforcement stance under former Chair Gary Gensler, lifting a cloud that hung over Kraken since November 2023.
The SEC sued Kraken on November 20, 2023, alleging the exchange operated as an unregistered securities broker, dealer, exchange, and clearing agency, while also accusing it of commingling customer and corporate funds—a practice the agency claimed posed “a significant risk of loss” to users.
Unlike its February 2023 settlement, where Kraken paid $30 million and shuttered its U.S. staking program, Kraken fought this case. A California federal judge ruled in August 2024 that the SEC’s claims were plausible enough for trial, rejecting Kraken’s motion to dismiss, which argued the agency overstepped its jurisdiction by classifying crypto tokens as securities without clear contracts.
Kraken’s defiance paid off. “The SEC’s decision to dismiss its lawsuit against us… ends a wasteful, politically motivated campaign,” the firm stated, framing the case as a mischaracterization of its business model that “clouded instead of clarified” regulations. The dismissal “with prejudice”—meaning the SEC cannot refile the same claims—follows a string of SEC retreats. On February 27, 2025, it dropped its case against Coinbase, and earlier probes against Gemini, Consensys, Uniswap, OpenSea, and Robinhood fizzled.
The timing aligns with a broader thaw in U.S. crypto policy. President Donald Trump’s March 2 announcement of a crypto reserve featuring Bitcoin, Ethereum, XRP, Solana, and Cardano—set for discussion at a March 7 White House Crypto Summit—sent markets soaring, with BTC up 11% to $94,164 and the crypto market cap rising $329 billion. Asian crypto stocks like Japan’s Monex Group (up 15.49%) and SBI Holdings (8.31%) surged. Kraken’s win dovetails with this shift, as the SEC’s new leadership pivots from Gensler’s “regulation by enforcement” to crafting clearer rules, a promise echoed in a February task force announcement.
The SEC’s original complaint leaned on the Howey Test, claiming Kraken facilitated trades of “investment contracts” without registration. Kraken countered in a February 2024 motion that no contracts existed—tokens were mere code, not securities—and that the SEC’s “ecosystem” theory lacked precedent.
What’s next? The March 7 summit could codify this thaw, with a stablecoin bill and FIT21 rumors swirling. Kraken’s unscathed exit—no $30 million repeat from 2023—sets a precedent: fight, don’t fold. But risks remain—Nigeria’s $81.5 billion Binance suit and a $1.5 billion Bybit hack last week, signal turbulence. If the SEC’s new guard delivers rules, not raids, crypto’s U.S. path clears. For now, Kraken stands tall, and Asia’s rally—Monex’s 15.49%—shows global eyes are watching.
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