The U.S. Securities and Exchange Commission has filed a motion in the Northern District Court of California, seeking to dismiss key defenses presented by Kraken in an ongoing legal dispute between the pair.
The regulatory watchdog contends Kraken had received prior fair notice when, last year, it charged the exchange with violating securities laws by offering crypto assets as “investment contracts,” according to a motion filed on Tuesday.
The timing of the SEC’s motion—filed on Election Day—prompted criticism from Kraken’s legal team, who view it as a tactic to avoid “discovery into the SEC’s defective and inconsistent policies.”
The agency seeks to eliminate Kraken’s claims of the major questions doctrine and due process violations—defenses Kraken argues are critical in protecting its operations from regulatory overreach.
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Cryptocurrency exchange Kraken must face a lawsuit brought against it by U.S. regulators, a federal judge ruled Friday. The lawsuit, filed last November in the U.S. District Court for the Northern District of California, alleges Kraken operated as an unregistered securities exchange, according to court filings. The ruling puts an end to Kraken's slew of efforts to get the lawsuit dismissed. “The SEC has plausibly alleged that at least some of the cryptocurrency transactions that Kraken facili...
Kraken’s insistence on lacking regulatory clarity is “without merit,” and the exchange was adequately warned about the potential classification of its crypto offerings as securities, the SEC contends.
The motion builds on the SEC’s argument that federal securities laws apply to digital assets offered as investments, a stance that has fueled multiple regulatory clashes with crypto firms.
“The Court should dismiss these defenses to help maintain the proper scope of discovery, narrow summary judgment, save judicial and party resources, and prevent Kraken from trying to re-litigate the same issues repeatedly at every possible stage of this case,” states the filing.
Crypto Exchange Kraken Cuts Staff in Move to Be 'Leaner and Faster'
American crypto exchange Kraken has laid off staff, making it the third major company in the space to do so this week—despite a surging Bitcoin price that nearly touched an all-time high on Tuesday. The San Francisco-based exchange also said that Arjun Sethi has joined as co-CEO alongside David Ripley. Sethi is also co-founder and Chairman at Tribe Capital, and previously was part of the executive team at web pioneer Yahoo. Alongside the appointment, Kraken framed the layoffs as a pivot for the...
Kraken’s attorney, Michael O’Connor, didn’t hold back in criticizing both the timing and intent of the SEC’s move, calling it an “Election Day gambit,” in a Wednesday statement on X.
O’Connor referenced the Ripple case, where a similar SEC motion was dismissed, expressing confidence that Kraken’s defenses would withstand scrutiny.
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During a press conference at Korea Blockchain Week 2024 in Seoul, fintech firm Ripple Labs' CEO Brad Garlinghouse predicted the ouster of U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler, whatever the outcome of the looming presidential election. According to a report in the Korean Herald, Garlinghouse said he would “make a gentleman’s bet” that Gensler’s tenure would not continue, regardless of who takes the White House in November. Ripple to Pay $125 Million Fine for Unregister...
The motion also arrives on the heels of Kraken’s demand for a jury trial. and its challenge to the SEC’s classification of 11 cryptos—including Solana (SOL), Cardano (ADA), and Polygon (MATIC)—as securities.
Kraken claimed that its repeated attempts to register with the SEC were “stonewalled” by the agency, alleging that SEC Chair Gary Gensler has inconsistently applied securities laws to the detriment of the crypto industry.
The SEC’s motion arrives amid speculation that Chair Gary Gensler could soon step down. With Donald Trump’s projected election win, analysts suggest Gensler may resign by year-end, following the precedent of SEC chairs leaving office during a change in administration.
Edited by Sebastian Sinclair
