Crypto exchange Kraken is embroiled in an SEC probe over whether it sold unregistered securities, report says

• The SEC is investigating Kraken over whether it offered unregistered securities for sale, per Bloomberg.
• The crypto exchange and the SEC could come to a deal over the probe in coming days, the report said.
• The crypto industry is facing intensified scrutiny after the spectacular demise of major exchange FTX.

Crypto exchange Kraken is under investigation by the Securities and Exchange Commission over whether it broke rules by selling unregistered securities to US customers, according to a Bloomberg report.

The US markets regulator's probe is at a late stage and a settlement with Kraken could arrive in the coming days, the Wednesday report said, citing a person familiar with the matter.

It's not clear which tokens or other offerings are under scrutiny.

A Kraken representative said the crypto exchange wasn't able to comment on the probe, but said it's "well capitalized and maintains a diverse product offering across many jurisdictions."

The crypto industry is facing intensified scrutiny after the spectacular demise in November of major exchange FTX, whose founder and former CEO Sam Bankman-Fried has been charged with multiple criminal fraud charges.

Crypto giants Genesis and Gemini were sued by the SEC in January for the unregistered offer and sale of securities to customers through an interest-bearing product. The regulator said the firms raised billions of dollars worth of crypto assets through the unregistered Gemini Earn program.

SEC Chair Gary Gensler has called for crypto platforms to "come into compliance" with regulations or face enforcement action. He said in September that crypto intermediaries should register with the SEC.

After Gensler's warning, Kraken's then-incoming CEO Dave Ripley said the exchange had no plans to delist tokens the SEC had labeled as securities, or to register with the agency as a market intermediary.

The crypto exchange was fined $1.25 million in 2021 by the Commodity Futures Trading Commission (CFTC) for offering some products illegally. In November, it handed over $362,000 to the US Treasury Department to settle allegations it violated US sanctions against Iran.

The SEC didn't immediately respond to Insider's request for comment.