- Kraken demands a jury trial in its legal battle with the SEC.
- The SEC accuses Kraken of violating securities laws by operating without registration as a broker and clearinghouse.
- A California court has permitted the case to proceed to trial, and Kraken is seeking a jury trial.
U.S.-based exchange Kraken has requested a jury trial in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). This move comes after a California judge ruled that the lawsuit against Kraken will proceed to trial. For context, the SEC accused Kraken of violating federal securities laws by failing to register as a broker, clearinghouse, or exchange.
The SEC’s lawsuit, filed in November 2023 in the Northern District of California, seeks to halt Kraken from allegedly violating securities laws and demands disgorgement of “ill-gotten gains” alongside other civil penalties.
The SEC identified 11 digital assets in the complaint, including Cardano (ADA), Algorand (ALGO), Filecoin (FIL), Decentraland (MANA), Polygon (MATIC), and Solana (SOL), classifying them as “unregistered securities.”
Kraken is not the only exchange under scrutiny. The agency has pursued similar cases against other popular exchanges like Binance and Coinbase, alleging failure to comply with registration requirements.
Kraken’s Defense: Not Securities, No SEC Jurisdiction
In its defense, Kraken argues that it has not engaged in illegal activities and is not subject to SEC regulation under the current legal framework.
The exchange has presented 18 defenses, including its interpretation of the Securities Act and the Exchange Act. Kraken contends that these laws do not explicitly cover digital assets, and therefore, registering with the SEC was not required.
Kraken further asserts that the SEC lacks authority over its activities because the listed digital assets do not carry the same rights and obligations as traditional securities like stocks or bonds.
Additionally, Kraken argues that its various operations, including listing over 220 crypto assets, offering margin trading, and operating an over-the-counter trading desk, do not qualify it as a securities exchange, clearing agency, or broker-dealer.
The firm also contends that the SEC failed to state “a claim upon which relief may be granted because it did not have the authority to regulate Kraken.”
The Stakes Are High for Crypto
The case is set to proceed in California, where the trial will determine whether the SEC’s allegations are upheld. The outcome of this case could have significant implications for the cryptocurrency industry, potentially shaping how digital assets are regulated in the United States.
Notably, Kraken’s request for a jury trial means that the exchange is seeking to have a group of ordinary citizens (a jury) decide the outcome of its legal dispute with the SEC rather than having the case decided by a judge alone.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
