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Kraken, a leading cryptocurrency exchange, has boldly sued the United States Securities and Exchange Commission (SEC). The exchange has contested the SEC’s allegations against it and demanded a jury trial for all contestable issues.
According to a court filing at the U.S Court, Northern District of California, San Francisco Division, Kraken is opting to defend itself. Notably, the U.S. SEC has alleged that Kraken Exchange’s parent companies, Payward Inc. and Payward Ventures Inc., operated the platform illegally.
Kraken Goes Offensive in Legal Strategy
In the court filing, Kraken highlighted its efforts to comply with the SEC’s requirement. However, as Kraken’s account of developments shows, every attempt has been met with a brick wall. Therefore, the exchange says its only option involved legal defense before a jury. This step has become necessary as a U.S. District Court dismissed an earlier attempt by the SEC to dismiss the lawsuit.
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Additionally, Kraken has alleged that the SEC needs to clarify which transactions fall into the category of investment contracts. The exchange maintains that digital assets cannot count as financial securities since they lack the rights and obligations of stocks, bonds, or other financial assets.
Implications of the Case
Other notable issues that Kraken is challenging in court include the ambiguity of terms used by the regulatory body in the complaint filed against the SEC. Some such terminologies include “Kraken-traded securities, crypto asset securities, proprietary assets and investors.”
The exchange insists that all these terms were just an excuse for the SEC to claim securities violations. Legal experts say a successful defense of this stance could set legal precedence in crypto.
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In a previous statement, the U.S. SEC distinguished these while emphasizing its position in the Binance case. According to the SEC, ‘crypto-asset securities’ do not refer to the crypto asset itself. It apologized for any confusion the terms might have caused.
Kraken’s Regulatory Battles Beyond the U.S.
Meanwhile, Kraken is also facing legal challenges in Australia in a lawsuit instituted by the Australian Securities and Investments Commission. The Australian Regulatory Commission expressed concern over Kraken’s offering of its Magic Extension Product margin to investors.
Analysts have suggested that Kraken Exchange borrow a leaf from Binance and sort out its regulatory challenges so that it can focus on expanding its services. In July, Kraken Exchange extended custody services to Australia and the UK.
