Kraken, one of the leading cryptocurrency exchanges, has made a bold move by requesting a jury trial in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). This development comes after a California Judge recently ruled that the SEC’s lawsuit against Kraken will proceed to trial, following similar actions taken against other major exchanges like Binance and Coinbase.
The SEC filed a lawsuit against Kraken last November in the Northern District of California, accusing the exchange of violating federal securities laws by not registering as a broker, clearinghouse, or exchange with the regulatory body. The SEC sought to permanently enjoin Kraken from further securities violations, as well as seek disgorgement of any profits gained unlawfully and impose civil penalties. The regulator specifically highlighted 11 tokens, including ADA, ALGO, ATOM, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG, and SOL, as unregistered securities being traded on Kraken’s platform.
In response to the SEC’s allegations, Kraken has vehemently denied engaging in any illegal activities. The exchange has presented 18 defenses in its defense, arguing that digital assets do not fall under the jurisdiction of the Securities Act or the Exchange Act. Kraken maintained that it was not required to register with the SEC as it did not operate as an exchange, broker-dealer, or clearing agent as defined by the Exchange Act.
Furthermore, Kraken criticized the SEC for lacking the authority to regulate its operations and claimed that the digital assets traded on its platform do not constitute investment contracts as per the SEC’s definition. The exchange pointed out that it offers a wide range of cryptocurrency assets for trading, margin trading, over-the-counter services, instant buy features, and customer applications, but argued that these services do not transform Kraken into a securities exchange or broker-dealer.
Interestingly, Kraken accused the SEC of acting arbitrarily and without proper due process, suggesting that the agency’s actions were a violation of its first amendment rights. The exchange’s legal team has taken a strong stance against the SEC’s allegations, emphasizing that the regulator’s case lacks merit and fails to establish a valid claim against Kraken.
As the legal battle between Kraken and the SEC intensifies, the cryptocurrency community is closely watching the outcome of this high-profile case. With the demand for digital assets on the rise and regulatory scrutiny increasing, the resolution of this dispute could have significant implications for the broader crypto industry.
Read More: SEC’s Case Against Kraken Will Proceed to Trial, California Judge Rules