Bitrabo Editorial
The cryptocurrency trading platform Kraken has once again denied the claims made by the US Securities and Exchange Commission (SEC) regarding the exchange’s sale of digital assets that the SEC alleges are unregistered securities.
Kraken’s Legal Stand Against SEC
In its legal response, the San Francisco-based exchange argued that it has not breached federal securities regulations. Kraken emphasized that the digital assets traded on its platform do not qualify as securities or investment contracts under current law.
Among the digital assets mentioned, Kraken pointed out that tokens like Algorand (ALGO), Cosmos (ATOM), Polygon (POL), Filecoin (FIL), Solana (SOL), and Cardano (ADA) do not meet the criteria for investment contracts. The exchange plans to engage in a jury trial against the SEC.
In their official statement, Kraken expressed:
Kraken has attempted to collaborate with the SEC to facilitate registration, but the industry has faced hurdles at every turn. The SEC seems focused on establishing enforcement authority that its Chair has acknowledged is unclear.
In November 2023, the SEC initiated a lawsuit against Kraken, alleging it operated an unlicensed cryptocurrency exchange. Jesse Powell, CEO of Kraken, criticized the SEC’s actions, describing them as a “recurrent attempt” at regulatory control.
Despite the SEC’s reputation for vigilant oversight of the crypto industry, Kraken has garnered support from US Senator Cynthia Lummis, who asserted that the SEC cannot continue to govern through enforcement without established regulations for digital assets.
To strengthen its argument, Kraken referenced the SEC v. W.J. Howey Co. case, which introduced the widely recognized Howey Test for determining if a transaction qualifies as a security or investment contract. The exchange underlined the SEC’s failure to demonstrate that the cryptocurrencies in question fit the security criteria.
Kraken’s decision to seek a jury trial follows a federal judge’s ruling that allowed the SEC’s lawsuit against the exchange to move forward. This decision coincides with the SEC’s acknowledgement that the phrase “crypto asset security” could be subject to various interpretations.
Ongoing SEC Action Against Cryptocurrency Firms
The SEC’s extensive actions within the cryptocurrency sector have prompted several states to unite in support of digital asset businesses, given that these states have stringent regulations intended to protect consumers beyond federal securities laws.
In August 2024, prominent NFT platform OpenSea caught the SEC’s attention when it received a Wells notice, suggesting that the NFTs traded there might be classified as securities. Currently, Bitcoin is trading at $58,461, reflecting a 1.5% increase over the past 24 hours.