Kraken has challenged the SEC’s arguments in a securities law violation proceeding

According to the exchange’s representatives, the officials incorrectly formulate arguments

10.05.2024 - 12:35

3 min

What’s new? The ongoing litigation on the lawsuit of the US Securities and Exchange Commission (SEC) against Kraken since November last year was supplemented by a new statement from the crypto exchange’s representatives. Kraken challenged the SEC’s use of the phrase “investment concept,” claiming that the regulator failed to identify investment contracts whose transactions could have been concluded with the exchange’s participation.

Material by Bloomberg

What else is known? The SEC accused Kraken of unregistered offerings of securities in the form of tokens, operating without registration as a broker-dealer, exchange and clearing agency, and commingling customer funds with its own. The regulator alleges that the exchange has made hundreds of millions of dollars since 2018 by illegally facilitating trading in crypto assets, which are securities but not properly registered.

Since filing the lawsuit, Kraken has refused to limit the services it offers. At the same time, in previous proceedings, at the request of the SEC, it stopped providing staking services in the United States and paid a $30 million fine.

As part of the new proceedings, Kraken filed a motion to dismiss the case, to which it received a response from the SEC in April. In the new appeal, the exchange comments on this response, pointing out that the regulator incorrectly formulates arguments. Thus, the SEC several times in its arguments used the terms “investment concept” and “ecosystem” instead of “investment contract” and “enterprise”.

There, officials, citing case law, added that “the words themselves do not delimit the security type because ‘the reach of the act does not stop with the obvious and commonplace.’”

ConsenSys challenges the SEC’s classification of ETH as a security

The commission had previously warned the developer of potential enforcement actions

Earlier this year, Kraken announced an aggressive expansion of its business in Germany, launching an institutional exchange and buying licensed US crypto broker TradeStation Crypto.

Author: