The SEC called Kraken's defenses "legally unsupportable" and asked for their dismissal.
The lawsuit was brought against the exchange in November 2023.
The U.S. Securities and Exchange Commission (SEC) asked the Northern District Court of California to dismiss three of the defenses made by Kraken to allegations the crypto exchange has acted unlawfully.
In a motion filed Nov. 5, the regulator dismissed Kraken's claims relating to a lack of clarity around securities laws and how they apply to virtual assets, as well as assertions the exchange was not given fair notice that its conduct was considered to be in violation of securities law.
It is also asking the court to reject Kraken's "major questions doctrine" defense. The doctrine is a legal principle established by the Supreme Court that holds that agencies should not expand their regulatory powers without clear authorization from Congress.
The SEC sued Kraken in November 2023 for operating a platform as an unregistered securities exchange, broker, dealer and clearing agency. The SEC said it believes that since at least September 2018, Kraken had made hundreds of millions of dollars unlawfully by facilitating the buying and selling of crypto asset securities. Kraken filed for the case to be dismissed, a motion that was rejected in August.
"When denying Kraken's motion to dismiss, this Court rejected Kraken's assertion that the major questions doctrine foreclosed this action and also determined that the definition of 'investment contract' under the Securities Exchange Act of 1934 is well-settled law," the SEC's motion said.
Kraken has "now propounded numerous discovery requests seeking voluminous sets of documents and sprawling admissions related to these legally unsupportable defenses," according to the filing.
"The Court should dismiss these defenses to help maintain the proper scope of discovery, narrow summary judgment, save judicial and party resources, and prevent Kraken from trying to re-litigate the same issues repeatedly at every possible stage of this case."