Centralized cryptocurrency trading platform Kraken has again refuted allegations by the US Securities and Exchange Commission (SEC) that the exchange sold digital assets that qualify as unregistered securities.
Kraken vs. SEC, a battle of legal definitions
In his answerThe San Francisco-based exchange insisted that it had not violated federal securities laws. Specifically, the exchange said that digital assets sold on its platform do not meet the legal definition of securities or investment contracts.
Specifically, the exchange claims that digital assets such as Algorand (ALGO), Cosmos (ATOM), Polygon (POL), Filecoin (FIL), Solana (SOL), and Cardano (ADA), among others available on the platform, are not investment contracts. Kraken is now preparing to file a jury trial against the SEC.
The exchange writes in its official presentation:
Kraken has attempted to work with the SEC to make registration possible, but the industry’s efforts have been stymied at every turn as the SEC has opted to pursue a strategy of fighting its sister regulators for enforcement authority that its chairman has admitted he does not have.
For the uninitiated, in November 2023 the SEC filed a lawsuit against Kraken, accusing it of operating an unregistered cryptocurrency exchange for digital assets. Unsurprisingly, Kraken CEO Jesse Powell criticized The SEC's lawsuit, calling it a “recurring attempt” at regulation.
While the SEC has gained infamy for its perceived ongoing surveillance of cryptocurrency companies, Kraken has found support from U.S. Senator Cynthia Lummis, who discussed that the SEC “cannot continue to govern by enforcement” without clear crypto laws.
To reinforce its position, in its filing, Kraken has cited the SEC v. W.J. Howey Co. ruling, which led to the creation of the famous Howey test that helps determine whether a transaction could qualify as a security or investment contract. The cryptocurrency exchange has emphasized the SEC’s failure to prove that the cryptocurrencies in question meet the criteria to be considered securities.
Kraken's decision to launch a jury trial against the financial regulator comes after a federal judge ruled… decision This paved the way for the SEC's lawsuit against the exchange to proceed to trial. It also comes at a time when the SEC has x.com/iampaulgrewal/status/1834447203680825809″ target=”_blank” rel=”noopener nofollow”>admitted that the use of the term “crypto asset security” is not entirely free from ambiguous interpretations.
US SEC Crackdown on crypto Entities Continues
The alleged overreach of the US SEC in the cryptocurrency industry has forced Several states are rallying to defend digital asset companies, as these states have strict laws that aim to safeguard their consumers more than federal securities.
In August 2024, leading non-fungible token (nft) platform OpenSea came under the SEC's radar when… received A notice from the regulator Wells, which hints that nfts traded on the platform may fall under the definition of securities. bitcoin is trading at $58,461 at press time, up 1.5% over the 24-hour period.
Featured image from Unsplash.com, chart from TradingView.com
