Kraken lawyer slams SEC legal strategy, draws parallels to Ripple case misstep Kraken lawyer slams SEC legal strategy, draws parallels to Ripple case misstep
The SEC moved to dismiss Kraken's major defenses in their ongoing legal battle.
2 min read
Updated: Nov. 7, 2024 at 3:56 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Kraken’s legal team, led by attorney Michael O’Connor, has criticized the US Securities and Exchange Commission (SEC) for its latest attempt to dismiss critical defenses raised by the exchange in their ongoing legal battle.
On Nov. 6, O’Connor shared a statement on X, condemning the SEC’s approach as an attempt to “avoid discovery” into what he described as the agency’s flawed and inconsistent policies. He argued that these policies harm the American economy.
O’Connor drew parallels between the SEC’s current strategy against Kraken and a similar move unsuccessfully tried in the Ripple case. He expressed confidence that Kraken’s defenses would withstand scrutiny,
Meanwhile, he also raised questions about the timing of this SEC’s motion, pointing out that it occurred on the day “Americans exercised their sovereign right to choose their political future.”
He further criticized SEC Chair Gary Gensler, stating:
“Gary knows his days are numbered, at 75 to be precise. Nonetheless, he continues to double down on his failed policies, now in express defiance of the American people.”
SEC’s motion
On Nov. 5, the SEC filed a motion to dismiss Kraken’s “fair notice” and “major questions doctrine” defenses. The agency argued that this would streamline the discovery process and prevent the exchange from revisiting the same issues repeatedly.
According to the SEC, Kraken’s claims of regulatory uncertainty are unfounded, and the exchange had adequate warning about the possible classification of its crypto offerings as securities.
The SEC maintained that federal securities laws apply to digital assets, noting that:
“Kraken may complain that none of the prior decisions applying Howey involved its specific facts of crypto assets being re-sold in a public secondary market, but that is not the type of notice the law requires. A statute need not provide an exact blueprint of what it permits and prohibits.”
The SEC initially filed its lawsuit against Kraken in November 2023, accusing the exchange of operating as an unregistered securities exchange, broker, dealer, and clearing agency. The financial regulator claims the crypto trading platform has offered these services since September 2018, generating significant profits. The court rejected Kraken’s attempt to dismiss the case in August.
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Kraken
Kraken is a San Francisco-based digital asset exchange in euro volume and liquidity that trades various currencies, including Canadian dollars, US dollars, British pounds, and Japanese yen.
Ripple
Ripple is a US-based technology company which develops the Ripple payment protocol and exchange network using XRP, the digital asset native to the XRP Ledger.
Gary Gensler is an American government official and former investment banker who President Joseph Biden nominated to chair the U.S.