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In the ongoing legal saga between Kraken and the U.S. Securities and Exchange Commission (SEC), the crypto exchange has launched a salvo with a new filing that argues the agency’s case was not worded correctly.
Kraken filed a response on Thursday to the SEC's April letter regarding the company's motion to dismiss the case. The exchange argues that the SEC's argument lacked precision, as it failed to specify any investment contracts tradable on Kraken.
Instead of using the terms "investment contract" and "enterprise," the SEC opted for phrases like "investment concept" and "ecosystem" throughout its argument, according to Kraken's filing.
The SEC's stance, as outlined in its April filing, defends its choice of language by stating that the scope of the law extends beyond conventional interpretations. This stance was backed by case law, the SEC argued.
Tomiwabold OlajideLast November, the SEC accused Kraken of operating as an unregistered broker, dealer, exchange and clearing agency. The SEC's complaint also alleges that Kraken has been unlawfully facilitating the buying and selling of crypto asset securities since at least September 2018, earning hundreds of millions of dollars in the process.
Kraken, under its parent company Payward Inc., had previously settled charges brought by the SEC against its staking business in February 2023.
As the case progresses, the crypto community watches with bated breath. Kraken's challenge to the SEC's wording is more than a legal argument; it is a stand against what the exchange views as an overextension of regulatory power.
The outcome of the Kraken case could have significant implications for how crypto exchanges operate and how digital assets are classified and regulated in the United States going forward.
Yuri Molchan
Dan Burgin
U.Today Editorial Team
Vladislav Sopov