Kraken Challenges SEC in Court

[TomPluz]

A court filing revealed that the prominent cryptocurrency exchange Kraken officially requested a jury trial in response to a lawsuit filed against it by the U.S. Securities and Exchange Commission (SEC). Kraken contests claims that it violated federal securities laws by operating without appropriate registration as a broker, clearing agency, or exchange.

Kraken’s legal argument asserts that both the Securities Act and the Exchange Act do not apply to cryptocurrencies. The exchange claims it does not meet the definitions of a stock exchange, broker-dealer, or clearing agency, and therefore is not required to register with the SEC. In its court filing, Kraken stated, “Cryptocurrencies themselves cannot be investment contracts as they do not carry the rights and obligations of a stock, bond, or other financial asset subject to SEC regulation.”

The SEC’s aggressive stance towards major cryptocurrency exchanges indicates a broader effort to regulate the crypto market within traditional frameworks. However, Kraken’s fight highlights ongoing debates about whether current securities laws are adequate for regulating cryptocurrencies and related services.

More of this development here.

Although this case is just one the many filed by SEC to fight many platforms doing business in and with the cryptocurrency industry be they CEX or DEX, as pointed out by this article, the outcome of this case will have a big impact on SEC and how it is regulating the industry and of the whole industry where SEC is lording over for years now.

The main argument will be focusing whether the existing laws regulating the market can be adequate or not if applied to the cryptocurrency industry...or do we need a new one that will specifically focus on it.

Is it YES or NO?

[bitterguy28]

The main argument will be focusing whether the existing laws regulating the market can be adequate or not if applied to the cryptocurrency industry...or do we need a new one that will specifically focus on it.

Is it YES or NO?

it’s very harmful to the cryptocurrency industry if the rules are not clear because it can be bent easily i do side with kraken and if they manage to win this against sec then there might be actions of adding clear rules and regulations regarding what can sec handle and what they can not or how will they deal with cryptocurrency

by now considering how much crypto has evolved, there should already be a classification specifically for crypto we can’t keep functioning blindly and depending only on the laws made for other assets different from crypto

[Bobcrypto]

I like the Kraken arguments based on the existing laws that were established for stocks, bond, and other financial assets subject to SEC regulations.
I am skeptic whether the SEC have good knowledge about cryptocurrency, and each time I read about them clamping down on CEX/Dex exchanges.
Based on some coins/token they had categorized as security, and on this arguments that were actually established to guide stocks, bonds, and others, unfortunately, many of the SEC lawsuit has not gone their favour, and I keep wondering if SEC chairman and his team are just chasing crypto exchanges for their selfish benefits or they are politically motivated. I think they have not been fair on their pursuit to regulate the cryptocurrency economy.

[Zed0X]

This is the response I was expecting the other cex would do and not simply pay $1.5 million then reduce the number of pairs to be traded on their exchange. Anyway, I think the SEC's strategy has been made clear to anyone that observes. First was to classify most coins/tokens as securities and then sue exchanges that continues to trade them.

[MrSpasybo]

This is the response I was expecting the other cex would do and not simply pay $1.5 million then reduce the number of pairs to be traded on their exchange. Anyway, I think the SEC's strategy has been made clear to anyone that observes. First was to classify most coins/tokens as securities and then sue exchanges that continues to trade them.

Yeah, crypto companies have become bolder and are daring to confront the SEC because paying fines doesn't solve the problem. Kraken has paid fines but continues to be accused by the SEC and Kraken has not continued to compromise. I think it's the positive political context for the future of crypto that has given Kraken the motivation and confidence in its battle with the SEC.

Kraken will need more support in terms of media and finance to win against the SEC. The SEC itself has no longer dared to arbitrarily accuse a series of tokens in the crypto market as securities so I think that the SEC will soon lose this lawsuit or this lawsuit will be postponed until we have a clear legal framework for crypto in the United States. I think the lawsuit from the SEC will be dismissed when crypto is clearly regulated and not considered a security.

[Zed0X]

This is the response I was expecting the other cex would do and not simply pay $1.5 million then reduce the number of pairs to be traded on their exchange. Anyway, I think the SEC's strategy has been made clear to anyone that observes. First was to classify most coins/tokens as securities and then sue exchanges that continues to trade them.

Yeah, crypto companies have become bolder and are daring to confront the SEC because paying fines doesn't solve the problem. Kraken has paid fines but continues to be accused by the SEC and Kraken has not continued to compromise. I think it's the positive political context for the future of crypto that has given Kraken the motivation and confidence in its battle with the SEC.

Kraken will need more support in terms of media and finance to win against the SEC. The SEC itself has no longer dared to arbitrarily accuse a series of tokens in the crypto market as securities so I think that the SEC will soon lose this lawsuit or this lawsuit will be postponed until we have a clear legal framework for crypto in the United States. I think the lawsuit from the SEC will be dismissed when crypto is clearly regulated and not considered a security.

I don't really want to make a conclusion on the outcome because I'm far from being knowledgeable about court proceedings. If I'll be guessing, the court's decision might favor both parties just like what happened to XRP's case. The coins/tokens that were initially sold to or funded by private investors will also be ruled as securities.

[erus]

~snip~
The main argument will be focusing whether the existing laws regulating the market can be adequate or not if applied to the cryptocurrency industry...or do we need a new one that will specifically focus on it.

Is it YES or NO?

If you look at the comparison with real businesses in my environment for new businesses or businesses, there must always be regulations. This feels heavy for entrepreneurs to see that the rules always burden entrepreneurs, but the results can provide relief for customers. If in crypto the regulation is presented by the SEC, of ​​course the SEC must also be able to protect every customer who trades on the CEX market or who invests their funds in coins regulated by the SEC, if the SEC cannot protect customers then it will be a blunder.

[Faisal2202]

Although this case is just one the many filed by SEC to fight many platforms doing business in and with the cryptocurrency industry be they CEX or DEX, as pointed out by this article, the outcome of this case will have a big impact on SEC and how it is regulating the industry and of the whole industry where SEC is lording over for years now.

The main argument will be focusing whether the existing laws regulating the market can be adequate or not if applied to the cryptocurrency industry...or do we need a new one that will specifically focus on it.

Is it YES or NO?

This is not the first time the SEC has sued an exchange for doing business in the US without registering with them.

SEC filed a lawsuit against an ICO of Gram, which was unregistered with the SEC, and they sued them. (source)

SEC charged ICO issuers because they ran unregistered ICOs, so they have to pay penalties (source)

SEC sued the DEX owner because it was also not registered with SEC and the fonder had to pay the money with interest (source

These are the only three cases, as there are more, I don't think Kraken stands a chance to win against SEC here, as If the Kraken could drag the case till the results of the election then something can happen in their favor only otherwise under Biden administration they stand no chance but to comply with them or have to face the results that Binance faced.

[Z-tight]

Gary Gensler and the sec are doing too much against crypto firms and services, it is by and large an attack against crypto right now. They simply sue and charge crypto services when there is no clear regulations or guidelines covering their operation, and at the end of the day, they'll settle with a huge payment. It is good for this services to respond to the sec and challenge them in court like kraken is doing.

[Captain Corporate]

I do not consider all of this as "attack" but more like providing some regulations and that is why its not that bad. Remember in american courts when a decision is made we end up seeing it as something as precedent and can be used later on so when he does somethşng like this that means its something that is a good situatşon and could help everyone. I know its not that easy to handle this and we cant make a profit from any of this if we just consider as attack because we can consider this as a way to use this as a map to navigate using it

[NotATether]

They sued Coinbase, Kraken, sought damages against Binance, and others. This agency has its hands everywhere, and while I'm not particularly enthusiastic about centralized exchanges, someone needs to draw a line for the SEC because they can't just go and say that every exchange is violating its rules just because they are allowing the trading of some coins they don't even know whether they are securities or not.

[Z-tight]

I know its not that easy to handle this and we cant make a profit from any of this if we just consider as attack because we can consider this as a way to use this as a map to navigate using it

If you look at how quick they are to go after cryptocurrencies and crypto firms, then i think it is safe to call it an attack, they are not trying to look in the direction of setting clear regulation or framework, they just enjoy going after different crypto services all at once. Then there is Gensler, who continually warns people about crypto, i know there is risk in crypto, but saying the same thing every single times does not make sense.

[dkbit98]

Good luck to Kraken in this case, but it is not going to be easy fighting a war that SEC started against all exchanges.
Maybe all honest centralized exchanges owners should finally unite and fight in single front, instead of fighting small individual battles.
However, I don't think this will happen any time soon.

[bitterguy28]

I do not consider all of this as "attack" but more like providing some regulations and that is why its not that bad. Remember in american courts when a decision is made we end up seeing it as something as precedent and can be used later on so when he does somethşng like this that means its something that is a good situatşon and could help everyone.

i don’t think it would be beneficial anymore if sec wins against many crypto exchanes it tries to file a lawsuit against yes it can help clear up more and more regulations but moreover it might just be damaging the image and reputation of whatever crypto platform the sec decides to fight today hopefully someday this reduces

[ABCbits]

Good luck to Kraken in this case, but it is not going to be easy fighting a war that SEC started against all exchanges.
Maybe all honest centralized exchanges owners should finally unite and fight in single front, instead of fighting small individual battles.
However, I don't think this will happen any time soon.

COPA (Crypto Open Patent Allience) shows it's possible, where they stopped faketoshi from hunting cryptocurrency developer and critics. And looking at https://www.opencrypto.org/members/, Kraken (along with other company sued by SEC) is already part of COPA. So IMO it could be sooner than you think.