U.S. Securities and Exchange Commission Litigation Release No. 26278, dated March 27, 2025.
The SEC filed a civil enforcement action against Kraken (Payward, Inc. and Payward Ventures, Inc.) on November 20, 2023. On March 27, 2025, the SEC and Kraken jointly stipulated to dismiss the case with prejudice. The SEC stated this dismissal was a policy decision to facilitate its reform of the crypto industry's regulatory approach, not an assessment of the case's merits.
In Plain English
The SEC sued Kraken, a crypto company, in late 2023. On March 27, 2025, both sides agreed to drop the lawsuit. The SEC said this was to help them rethink how they regulate crypto companies, not because they thought Kraken did anything wrong or right.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- SEC Files Complaint On November 20, 2023, the Securities and Exchange Commission (SEC) filed a civil enforcement action against Payward, Inc. and Payward Ventures, Inc., collectively known as Kraken, in the U.S. District Court for the Northern District of California. The case number is 3:23-cv-06003-WHO.
- Court Denies Motion to Dismiss On August 23, 2024, the Court denied the Defendants' motion to dismiss the SEC's complaint, allowing the case to proceed.
- SEC Forms Crypto Task Force On January 21, 2025, the SEC's Acting Chairman Mark T. Uyeda launched a crypto task force aimed at developing the Commission's regulatory framework for crypto assets.
- Joint Stipulation to Dismiss In light of the foregoing developments and in the exercise of its discretion, the SEC and Kraken submitted a joint stipulation to dismiss the litigation. This stipulation was filed on March 27, 2025.
- Dismissal with Prejudice Pursuant to Fed.R.Civ.P. 41(a)(1)(A)(ii), the parties agreed to have the litigation dismissed with prejudice as to the conduct alleged in the Complaint through the date of the stipulation. No costs or fees were awarded to either party.
- SEC Policy Rationale The SEC's decision to dismiss the action was based on its judgment that dismissal would facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry. This decision was a policy matter and did not reflect an assessment of the merits of the claims alleged.
- No Impact on Other Cases The joint stipulation explicitly stated that the Commission’s decision to seek dismissal of this Litigation does not necessarily reflect the Commission’s position on any other case.
- Defendants Waive Rights As part of the stipulation, the Defendants waived and released any and all rights to seek reimbursement of attorney's fees or other costs expended in relation to the litigation, including investigative steps, under provisions like the Equal Access to Justice Act.
The Enforcement Action
The SEC filed a civil enforcement action against Payward, Inc. and Payward Ventures, Inc. (Kraken) on November 20, 2023. On March 27, 2025, the SEC and Kraken filed a joint stipulation to dismiss the case with prejudice. The SEC cited its discretion and a policy decision to facilitate regulatory reform in the crypto industry as the basis for dismissal, not an assessment of the merits of the claims. The defendants waived rights to seek fees and costs.