Kraken disputes SEC’s interpretation in dismissal motion

Kraken, the cryptocurrency exchange, has responded to the SEC’s lawsuit by filing a reply in which it denies the agency’s allegations of trading unregistered securities. Kraken argues that the SEC’s case lacks precision and misinterprets fundamental legal concepts. In its response, Kraken points out discrepancies in the SEC’s argument, specifically the agency’s failure to accurately identify investment contracts on the exchange. The SEC had initially sued Kraken last November, accusing it of unlawfully profiting from crypto asset securities transactions and providing services without proper registration. Kraken, Filed a motion to dismiss, claiming that the lawsuit sets a dangerous precedent for the SEC’s jurisdiction.

The SEC responded with a 39-page opposition to Kraken’s motion, asserting that the agency’s enforcement action is within its granted authority. In its subsequent motion, Kraken challenges the SEC’s claim that written contracts are necessary in investment agreements, emphasizing that contracts can be oral, expressed, or implied. Kraken believes that the SEC’s attempt to dismiss unaddressed arguments shows a misunderstanding of the case’s key points. To support its stance, Kraken cites past SEC cases related to initial coin offerings (ICOs) that revolved around contractual rights and obligations, aligning with Kraken’s interpretation of investment contracts.

Kraken’s motion revolves around its interpretation of the SEC’s jurisdiction using the Howey test, which defines a security based on specified criteria such as capital investment, common enterprise, expectation of profit, and reliance on the efforts of others. The U.S. Congress is currently deliberating on cryptocurrency regulation, with multiple bills under consideration. Eight state attorneys general have filed a joint amicus brief, arguing that the SEC has exceeded its delegated authority in the lawsuit against Kraken.

Kraken is fighting back against the SEC’s allegations by refuting them in its legal defense. It highlights inconsistencies in the SEC’s arguments and asserts that the agency’s use of terminology reflects a misunderstanding of the case’s legal framework. Kraken’s motion seeks to dismiss the lawsuit and challenges the SEC’s authority, relying on past cases and the Howey test to support its arguments. The outcome of this case will be significant for both the SEC’s jurisdiction over cryptocurrency exchanges and the future regulatory landscape in the United States.

Sandy Mozingo

Sandy Mozingo

2 thoughts on “Kraken disputes SEC’s interpretation in dismissal motion

  1. Kraken’s legal defense is strong and persuasive. They’re definitely making the SEC work hard in this case! 💼

  2. I’m impressed by how Kraken is using the Howey test to challenge the SEC’s jurisdiction. They’re not backing down!

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