The Securities and Exchange Commission (SEC) levied charges against an unregistered cryptocurrency trading platform.

The charges were filed against Payward Inc. and Payward Ventures Inc., together known as Kraken. They were charged with operating Kraken’s crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency.

Since at least September 2018, according to the SEC’s complaint, Kraken has made hundreds of millions of dollars unlawfully facilitating the buying and selling of crypto asset securities. The SEC alleges that Kraken intertwines the traditional services of an exchange, broker, dealer, and clearing agency without having registered any of those functions with the SEC. Kraken’s alleged failure to register these functions has deprived investors of protections, including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest, among others.

“We allege that Kraken made a business decision to reap hundreds of millions of dollars from investors rather than coming into compliance with the securities laws. That decision resulted in a business model rife with conflicts of interest that placed investors’ funds at risk,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said. “Kraken’s choice of unlawful profits over investor protection is one we see far too often in this space, and today we’re both holding Kraken accountable for its misconduct and sending a message to others to come into compliance.”

The SEC said Kraken allegedly provides a marketplace that brings together the orders for securities of multiple buyers and sellers using established, non-discretionary methods under which such orders interact, and thus operates as an exchange. It also engages in the business of effecting securities transactions for the accounts of Kraken customers, and thus operates as a broker. Further, it engages in the business of buying and selling securities for its own account without an applicable exception, and thus operates as a dealer, the SEC alleges. Finally, it serves as an intermediary in settling transactions in crypto asset securities by Kraken customers, and acts as a securities depository, and thus operates as a clearing agency.

The SEC’s complaint also alleges that Kraken’s business practices, deficient internal controls, and poor recordkeeping practices present several risks for its customers. Specifically, the SEC alleges that Kraken commingles its customers’ money with its own, including paying operational expenses directly from accounts that hold customer cash. It also allegedly commingles its customers’ crypto assets with its own, creating what its own auditor had identified as “a significant risk of loss” to its customers.

The SEC is seeking injunctive relief, conduct-based injunctions, disgorgement of ill-gotten gains plus interest, and penalties. In February, Kraken agreed to cease offering or selling securities through crypto asset staking services or staking programs and pay a civil penalty of $30 million.