The Securities and Exchange Commission (SEC) of the USA has filed a motion with the Court requesting to dismiss the defenses of the crypto exchange Kraken.
The regulatory agency also complained about “having to discuss the same issues repeatedly.”
Kraken: the SEC and the motion to dismiss the three defenses of the crypto-exchange
The saga of the SEC vs. Kraken case continues, which began last November 2023. Now it is the Securities and Exchange Commission (SEC) of the USA that has asked the Court to dismiss three of the crypto-exchange’s defenses.
According to what has been reported, the SEC has filed a motion with the Northern District Court of California.
In practice, the SEC asks to reject Kraken’s requests related to:
- the lack of clarity on laws regarding security and their application to virtual assets;
- the statements of the crypto-exchange claiming to not have been properly informed that its conduct was considered a violation of security laws;
- the statements of Kraken based on the “doctrine of major questions.”
The doctrine is a legal principle established by the Supreme Court, according to which agencies should not expand their regulatory powers without clear authorization from Congress.
Kraken vs. SEC: an excess of power against crypto?
It was February 2024 when Kraken had filed its motion to dismiss, in a federal court in San Francisco, the lawsuit filed by the SEC in November 2023.
The SEC had accused the crypto-exchange of illegally earning millions of dollars from unregistered security transactions (the crypto), as well as providing exchange, broker, dealer, and clearing agency services without the proper registration.
In its request for dismissal, then, Kraken had invoked the “major questions doctrine,” arguing that Congress should pass laws rather than delegate authority to regulatory authorities like the SEC.
And here is today the response from the SEC, which would have defined such statements as “legally unsustainable,” once again requesting their dismissal. Here is how the SEC’s motion reads:
“In rejecting Kraken’s motion to dismiss, the Court dismissed Kraken’s claim that the major questions doctrine precluded this action and also established that the definition of ‘investment contract’ under the Securities Exchange Act of 1934 is a well-established law.”
The request for a trial by jury
Today, the SEC complains to the Court that Kraken tries to reargue the same issues repeatedly, at every possible stage of the case.
In the meantime, in September, Kraken had filed an explicit request for the trial of the case against the SEC brought to court to have a jury.
This request was not directly motivated by the crypto-exchange, but from an analysis, it is clear that it was made to prevent authorities like judges and the SEC from easily deciding unfavorably for Kraken.