Bitrabo Editorial
A California judge ruled that Kraken, a major player in the crypto industry, must confront a lawsuit filed by the US Securities and Exchange Commission (SEC), dealing a significant blow to the exchange.
Legal Challenge for Kraken
The SEC has accused Kraken of running an unregistered securities exchange, a claim vehemently disputed by the company. However, Judge William H. Orrick in San Francisco found merit in the SEC’s argument that some crypto tokens on Kraken’s platform could be classified as “investment contracts” and therefore fall under the agency’s oversight.
Despite Kraken’s defense that the SEC lacks jurisdiction over digital assets, Judge Orrick rejected this stance, stating that the SEC’s claims against the exchange hold weight. This ruling is a win for the SEC, which has been increasingly assertive under Chair Gary Gensler’s leadership, contending that many digital tokens are unregistered securities.
Increasing Regulatory Pressure on Crypto Industry
The ruling against Kraken follows a series of mixed outcomes for the SEC in prominent crypto cases. While a Manhattan judge ruled in favor of Ripple last year, determining that XRP token sales to the public were outside of SEC jurisdiction, other courts have sided with the agency in cases involving Terraform Labs and Coinbase.
Although the SEC’s authority was limited in the Ripple case to XRP sales to institutional investors, the exchange was directed to pay a $125 million civil penalty, significantly lower than the initial $2 billion sought by the SEC.
With the SEC lawsuit progressing, Kraken is now poised for an extended legal battle regarding the regulatory status of the crypto assets traded on its platform.
As of the latest update, Bitcoin was trading at $63,647, showing a surge of over 4% in the last 24 hours.
Image source: DALL-E, chart source: TradingView.com