- Kraken is in search of a trial in its authorized battle with the SEC.
- The SEC accuses Kraken of violating securities legal guidelines by working as a dealer and clearing home with out registration.
- A California court docket has allowed the case to proceed to trial, and Kraken is in search of a jury trial.
The American inventory alternate Kraken requested o.a jury court docket in its ongoing authorized battle with the US Securities and Change Fee (SEC). The transfer comes after a California choose dominated that the lawsuit in opposition to Kraken will go to trial. For context, the SEC accused Kraken of violating federal securities legal guidelines by failing to register as a dealer, clearinghouse or alternate.
The SEC's lawsuit, filed in November 2023 within the Northern District of California, seeks to cease Kraken from allegedly violating securities legal guidelines and seeks disgorgement of “ill-gotten features” together with different civil penalties.
The SEC recognized 11 digital property within the criticism, together with Cardano (ADA), Algorand (ALGO), Filecoin (FIL), Decentraland (MANA), Polygon (MATIC), and Solana (SOL), and labeled them as “unregistered securities.”
Kraken isn’t the one alternate beneath scrutiny. The company has pursued comparable instances in opposition to different fashionable exchanges resembling Binance and Coinbase, alleging that they didn’t adjust to registration necessities.
Kraken's Protection: No Securities, No SEC Jurisdiction
In its protection, Kraken maintains that it has not engaged in criminal activity and isn’t topic to SEC regulation beneath the present authorized framework.
The alternate offered 18 defenses, together with the interpretation of the Securities Act and the Change Act. Kraken argues that these legal guidelines don’t particularly apply to digital property, and thus registration with the SEC was not required.
Kraken additional argues that the SEC lacks jurisdiction over its actions as a result of listed digital property don’t have the identical rights and obligations as conventional securities resembling shares or bonds.
As well as, Kraken claims that its varied operations, together with itemizing greater than 220 crypto property, providing margin buying and selling and working an OTC buying and selling desk, don’t qualify it as a inventory alternate, clearing company or broker-dealer.
The agency additionally claims that the SEC didn’t state “a declare upon which aid could also be granted as a result of it lacked the authority to manage Kraken.”
The stakes are excessive for cryptocurrencies
The case is about to proceed in California, the place a court docket will determine whether or not the SEC's allegations are upheld. The result of this case may have vital implications for the cryptocurrency trade and doubtlessly form the regulation of digital property in the US.
Specifically, Kraken's request for a jury trial implies that the alternate is in search of to have a gaggle of strange residents (a jury) determine the result of its authorized dispute with the SEC, reasonably than a choose deciding the case alone.
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