- Kraken has filed a motion asking the court to dismiss a case filed against it by the SEC.
- The crypto exchange cited inappropriate wording as a reason the court should strike the motion.
- Kraken also noted that the filing could cause a “significant reordering” of the U.S. financial regulatory structure.
Kraken, a United States-based cryptocurrency exchange, has filed a motion asking the court to dismiss a case filed against it by the U.S. Securities and Exchange Commission (SEC). According to reports, Kraken cited inappropriate wording by the SEC as a reason why the court should strike out the SEC’s motion.
The crypto exchange highlighted that the SEC failed to identify “any investment contracts that were (or could be) traded, brokered or settled on Kraken.” Kraken’s filing stated that the SEC used the terms investment “concept” and “ecosystem” instead of “investment contract” and “enterprise” several times in its argument.
The SEC and Kraken have been entangled in a lawsuit since November 2023, after the commission alleged that the crypto exchange failed to register appropriately and co-mingled customers’ funds. Last February, Kraken responded to the SEC’s filing, echoing the legal arguments deployed by competitors Binance and Coinbase in similar lawsuits.
According to Kraken, the SEC is using the lawsuit as retaliation for political speech, citing a speech by Marco Santori, the crypto exchange’s chief legal officer, in May last year, when he testified about the SEC’s overreach before Congress.
Kraken noted in a public message that “Crypto innovators in the United States should not have to fear retaliation for their political speech.” It further affirmed that those involved in crypto must be protected from intimidation by a “politically compromised” agency.
Meanwhile, Kraken’s latest filing also asked the court to dismiss the SEC’s latest filing to avoid a “significant reordering” of the U.S. financial regulatory structure. According to Kraken, the SEC cannot satisfy Howey’s additional requirements that there be money investments in a common enterprise with a reasonable expectation of profits based on the efforts of others.
Kraken’s lawyers noted that admitting the SEC’s motion would gut Howey by significantly expanding the SEC’s jurisdiction to a host of investment activities that were never delegated to the agency. The lawyers argued that such a significant reordering of the U.S.’s financial regulatory structure should be debated in Congress, not in the courts.
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