The U.S. Securities and Exchange Commission (SEC) fired a fresh salvo in its cryptocurrency crackdown on Monday when it sued Kraken for operating an unregistered securities exchange and allegedly mixing customer funds with its own.

Kraken Under Scrutiny Again

The regulator has long held the view that most cryptocurrency tokens are securities and crypto exchanges offering sale of those tokens need to register as such. The latest suit against Kraken is not much different from the ones the SEC filed against rival exchanges Binance, Bittrex and Coinbase (COIN) earlier in the year.

Filed before a U.S. district court in California, the lawsuit against Kraken names specific cryptocurrencies the SEC considers securities and alleges Kraken is running an unregistered securities exchange by offering them for sale.

These tokens include Cardano (ADA), Cosmos (ATOM), Dash (DASH), Filecoin (FIL), Internet Computer (ICP), Polygon (MATIC), and Solana (SOL), among others.

This is the second enforcement action Kraken has faced this year, as the crypto exchange previously paid a $30 million settlement for charges related to their staking-as-a-service offering back in February.

Kraken Comingled Customer Funds?

Comingling or mixing customer funds with its own is another allegation Kraken faces in the SEC's complaint.

"For example, Kraken has at times held customer crypto assets valued at more than $33 billion, but it has commingled these crypto assets with its own, creating what its independent auditor had identified in its audit plan as 'a significant risk of loss' to its customers," the filing said.

The regulator also alleges Kraken has on occasion "paid operational expenses directly from bank accounts that hold customer cash." The company's business practices, internal controls, and recordkeeping were also found lacking.

Comingling user funds was also one of the allegations faced by now-defunct crypto exchange FTX and its founder Sam Bankman-Fried.

“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,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. Naturally, Kraken disagrees with the SEC.

"The SEC famously argues that digital asset trading platforms like Kraken can simply 'come in and register' with the agency," the company said in a blog post. "As most securities law experts know, there is not a single law on the books supporting this position."