Kraken challenges SEC’s authority, demands jury trial over crypto asset disputes Kraken challenges SEC’s authority, demands jury trial over crypto asset disputes
Kraken unequivocally denied that it was involved in any illicit activity.
2 min read
Updated: Sep. 13, 2024 at 12:33 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Kraken has requested a jury trial in response to the US Securities and Exchange Commission’s (SEC) lawsuit, according to a Sept. 12 court filing.
The move comes after a federal judge rejected Kraken’s bid to dismiss the case, which centers on claims that the platform operated an unregistered securities exchange.
Kraken’s defense
In its filing, Kraken denied any illegal activity and criticized the SEC’s approach to the crypto industry.
The exchange highlighted its attempts to engage with the regulator, which was met with resistance. It stated:
“Kraken has tried to work with the SEC to make registration feasible. But the industry’s efforts have been stonewalled at every step, as the SEC has instead chosen to pursue a strategy of fighting with its sister regulators for enforcement authority its Chair admitted it did not have.”
Further, Kraken claims it was unaware of which digital assets the SEC considered “investment contracts” until the lawsuit was filed. The regulator labeled these digital assets traded on the crypto platform as securities: ADA, ALGO, ATOM, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG, and SOL.
Kraken also disputed the SEC’s term “crypto asset securities,” arguing that the courts have already rejected it. It stated:
“The SEC has pointed to no transactions where investment contracts were allegedly formed on Kraken. The digital assets themselves cannot be the investment contracts because they carry none of the rights and obligations of a share of stock, a bond, or any other financial asset that Congress has said is subject to SEC regulation.”
As a result, Kraken firmly denied that it engaged in any illegal activity.
Challenges SEC’s authority
Kraken also questioned the SEC’s authority to regulate its business under certain sections of the Securities Exchange Act. The exchange argued that digital assets do not qualify as securities or investment contracts, and therefore, trading these assets on Kraken does not violate the Exchange Act.
Additionally, Kraken claimed that the SEC failed to provide adequate notice that its actions were unlawful, violating the exchange’s due process rights.
Its legal team argued:
“Due to the lack of clarity and fair notice regarding Kraken’s obligations under the law, in addition to the lack of clarity and fair notice regarding Plaintiff’s interpretation of the law, Kraken lacked fair notice that its conduct was prohibited.”
Mentioned in this article
Author 
Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
Latest US Stories
Featured Story
Advertise Here
In this article
Cardano is a decentralized public blockchain and cryptocurrency project and is fully open source.
Internet Computer
$10.6306
The Internet Computer is a seamless shared universe for reimagined software that’s secure and unstoppable, that can power a new generation of enterprise systems and internet services.
Solana
$195.225
Solana is a high-performance blockchain platform that utilizes a unique consensus algorithm called “Proof of History” to achieve fast transaction speeds and low fees.
Filecoin
$5.17208
Filecoin is a peer-to-peer network that stores files on the internet, with built-in economic incentives to ensure files are stored reliably over time..
Polygon
$0.49891
Polygon, a prominent layer 2 scaling solution on Ethereum, has emerged as a multifaceted and scalable platform, enhancing the Ethereum ecosystem’s capabilities.
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.