- Judge rules that Kraken must face SEC lawsuit filed last November.
- Kraken had argued its transactions do not fall under SEC regulatory purview.
- Political pressure mounts against agency during election season.
Crypto exchange Kraken must face a lawsuit filed by the US Securities and Exchange Commission accusing it of operating an unregistered securities exchange, a federal judge ruled in denying a bid to dismiss the case.
“The SEC has plausibly alleged that at least some of the cryptocurrency transactions that Kraken facilitates on its network constitute investment contracts, and therefore securities, and are accordingly subject to securities laws,” District Judge William H. Orrick wrote in an opinion published in San Francisco federal court.
Kraken had argued that it did not need to register with the agency because the transactions on its platform do not involve securities and so do not fall under the SEC’s regulatory purview.
The SEC originally filed the lawsuit last November, claiming that Kraken’s crypto trading platform operates as an unregistered securities exchange, broker, dealer, and clearing agency.
The charges are similar to those the SEC brought against Binance and Coinbase in lawsuits earlier last year, DL News has reported.
The lawsuits illustrate that the SEC and its Chair Gary Gensler remain committed to holding crypto firms responsible for complying with securities laws and registering like traditional brokerages and exchanges.
Crypto industry leaders including Coinbase CEO Brian Armstrong and the Blockchain Association, the industry’s lobbying group, reject the argument that digital assets, and companies that offer them, are subject to the same laws that govern stocks and bonds.
Crypto pundits have complained that the SEC is regulating by enforcement, thus creating a hostile environment in the US for the industry.
And the current election season has seen mounting political pressure brought to bear against the SEC and Gensler over the agency’s crypto policies.
Crypto exchange Gemini co-founder Tyler Winklevoss said in a post on X that the crypto industry should demand to know who would be the next SEC chair before the November elections, because a repeat of the last four years should not be tolerated.
Crypto-friendly Democrats have also urged that a pro-innovation SEC chair be chosen to replace Gensler.
Crypto market movers
- Bitcoin is up 5.04% today at $64,195.49.
- Ethereum is up 3.04% today at $2,759.67.