The U.S. Securities and Exchange Commission has filed a lawsuit against Kraken, accusing it of illegal securities operations.

According to Reuters, the SEC accused the platform of illegally operating as a securities exchange without first registering with the regulator.

The SEC said Payward Inc. and Payward Ventures Inc., operating under the name Kraken, have made hundreds of millions of dollars since 2018 by organizing the buying and selling of cryptocurrencies while “turning a blind eye” to securities laws designed to protect investors.

The cryptocurrency exchange was also accused of insufficient internal controls and poor record keeping, partly reflected by commingling clients’ money with its own and paying operating expenses directly from clients’ accounts.

“Kraken’s choice of malicious profits over investor protection is one we see far too often in this space.”

Gurbir Grewal, SEC enforcement chief

In a statement, Kraken said the SEC’s complaint acknowledges that any alleged “commingling” amounts to “nothing more than a fee for Kraken’s expenses that it has already earned.”

SEC vs. Binance

The SEC filed a similar client asset commingling lawsuit against Binance in June. The regulator brought 13 charges against the crypto exchange and its founder, Changpeng Zhao.

Before this, in March, the Commodity Futures Trading Commission (CFTC) filed its lawsuit against the exchange, alleging that Binance and Zhao regularly violate the rules and facilitate circumvention of blocking by American users, who are formally prohibited from accessing the global Binance and, in particular, from trading cryptocurrency futures.