The U.S. Securities and Exchange Commission (SEC) has filed a motion in the Northern District Court of California, seeking to dismiss key defenses put forward by Kraken in their ongoing legal dispute.
The SEC argues that Kraken was given “fair notice” when it charged the crypto exchange last year with offering crypto assets as “investment contracts” in violation of securities laws. The timing of this motion, filed on Election Day, has drawn criticism from Kraken’s legal team, who claim it’s a strategic move to prevent “discovery into the SEC’s defective and inconsistent policies.”
The SEC is pushing to eliminate Kraken’s defenses related to the major questions doctrine and due process violations—defenses that Kraken says are essential for safeguarding against regulatory overreach. The agency contends Kraken’s claims of regulatory ambiguity are “without merit” and that the exchange was adequately warned about the potential securities classification of its crypto offerings.
The motion reinforces the SEC’s position that federal securities laws apply to digital assets marketed as investments, a stance that has sparked multiple regulatory confrontations with crypto firms.
“The Court should dismiss these defenses to help maintain the proper scope of discovery, narrow summary judgment, save judicial and party resources, and prevent Kraken from trying to re-litigate the same issues repeatedly at every possible stage of this case,” states the filing.
Kraken’s attorney, Michael O’Connor, strongly criticized the timing and intent of the SEC’s move, calling it an “Election Day gambit” in a Wednesday statement on X. O’Connor cited the recent Ripple case, where a similar SEC motion was dismissed, and expressed confidence that Kraken’s defenses would hold up.
The motion also follows Kraken’s request for a jury trial and its challenge to the SEC’s classification of 11 cryptos—including Solana (SOL), Cardano (ADA), and Polygon (MATIC)—as securities. Kraken claims it faced multiple “stonewalled” attempts to register with the SEC, further alleging that SEC Chair Gary Gensler has inconsistently enforced securities laws, harming the crypto industry.
The SEC’s move comes amid speculation that Gensler could step down soon. Following Donald Trump’s anticipated election win, analysts suggest Gensler may resign by the end of the year, aligning with the historical trend of SEC chairs leaving during a change in administration.
