Kraken, a popular crypto exchange, is currently embroiled in a legal battle with the U.S. Securities and Exchange Commission (SEC) and has requested a jury trial to address the allegations brought against it. This move comes after a California Judge ruled last month that the SEC’s lawsuit against Kraken will indeed proceed to trial, following similar rulings in cases involving other major exchanges like Binance and Coinbase.
The SEC’s lawsuit against Kraken accuses the exchange of violating federal securities laws by not registering as a broker, clearinghouse, or exchange with the regulatory body. The SEC is seeking to permanently enjoin Kraken from further securities violations, as well as seeking disgorgement of any profits deemed to be “ill-gotten” and other civil penalties. The regulatory body specifically listed 11 tokens, including ADA, ALGO, ATOM, and SOL, as unregistered securities that were allegedly traded on the platform.
In response to the allegations, Kraken has denied engaging in any illegal conduct and has presented 18 defenses against the SEC’s claims. The exchange argues that digital assets are not covered under existing securities laws, stating that it was never required to register with the SEC as it does not meet the criteria of being an exchange, broker dealer, or clearing agent under the Exchange Act.
Furthermore, Kraken has contested the SEC’s authority to regulate its operations, claiming that the digital assets traded on its platform do not carry the same rights and obligations as traditional financial assets subject to SEC oversight. The exchange emphasized that its services, such as margin trading and over-the-counter trading, do not transform it into a securities exchange or broker-dealer.
Notably, Kraken has accused the SEC of acting without due process and fair notice, suggesting that the legal action taken against it infringes on its First Amendment rights. The exchange remains steadfast in its defense against the SEC’s claims and has opted for a jury trial to address the matter.
For more information on the ongoing legal battle between Kraken and the SEC, you can read about the recent ruling by a California Judge allowing the case to proceed to trial.