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Sujit Kumar
Feb 23, 2024
by Sujit Kumar

Kraken Challenges SEC Lawsuit, Files Motion to Dismiss Allegations

Kraken Challenges SEC Lawsuit

Table of contents

  1. Kraken Counters SEC Allegations
  2. Questioning Legal Basis and Political Motivations
Cryptocurrency exchange Kraken takes a proactive stance against the SEC's November lawsuit, filing a motion to dismiss the charges. Kraken challenges the SEC's claims, emphasizing flaws in the agency's arguments and questioning the absence of identified "investment contracts" in their complaint.

Kraken Counters SEC Allegations

Kraken, a prominent cryptocurrency exchange, has filed a motion to dismiss the Securities and Exchange Commission's (SEC) November lawsuit. The SEC accused Kraken of operating without registration, failing to prevent conflicts of interest, and commingling client funds.

In response, Kraken published a blog post asserting that the SEC's claim is flawed. The agency alleged that Kraken operates an unlicensed platform for "investment contracts" without specifying any "contract" between Kraken users and token issuers. Kraken challenges this by stating, "None of the assets in the SEC’s Complaint are investment contracts under the law."

The exchange further argues that crypto tokens do not meet the criteria of the Howey test, a standard used by U.S. authorities to define securities as "investment contracts." Kraken contends that the SEC's theory implies an investment contract without a contract, post-sale obligations, or any interaction between the issuer and the purchaser.

Questioning Legal Basis and Political Motivations

Kraken questions the legal basis of the SEC's lawsuit, asserting that the agency did not accuse them of fraud or customer disservice. The exchange warns that allowing the SEC to proceed with the claim could set a "dangerous precedent for agency overreach."

Kraken CEO Dave Ripley goes further, suggesting political motivations behind the SEC's actions. Ripley claims that the accusations are politically driven, highlighting the SEC's swift response to Kraken's testimony about regulatory overreach in crypto before congressional committees.

In light of these allegations, Kraken emphasizes that crypto innovators in the U.S. should not face retaliation for their political speech, advocating for fair and constructive regulatory rulemaking.

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Kraken Challenges SEC Lawsuit
Kraken Challenges SEC Lawsuit, Files Motion to Dismiss Allegations
Sujit Kumar
Sujit received his Bachelors in Science from the LNMU Darbhanga. He is currently working as a Content Strategist. He has more than three years of professional experience in information systems, security policies, technologies, and Cryptocurrency. He has published 6 books in the area of information security and assurance. He has published more than 50 research articles in leading journals Regarding the Latest and Breaking Crypto News and updates. His research interests include access control, computer forensics, Digital Marketing, Web development, business hacks, player experience, and virtual storytelling.

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