Court Denies Kraken’s Motion to Dismiss US SEC Lawsuit
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U.S. crypto exchange Kraken fails to dismiss a lawsuit filed against it by the SEC.

The SEC alleged that some of the transactions made by Kraken are subject to securities law.

The Judge states that an asset can be considered a security if it passes the Howey Test.

Crypto exchange Kraken faces another lawsuit filed by the U.S. Securities and Exchange Commission (SEC) on Friday. The Security Commission alleged that some of the transactions made by the exchange constitute security and must come under the securities laws. Kraken’s motion to dismiss the lawsuit was denied.

SEC Targets Kraken’s Transactions

The SEC alleged that the crypto firm acting as a broker, dealer, exchange, and clearing agent is not registered with the Commission.

It insisted that some of the transactions made by the firm should be considered investment contracts, implying that they are securities and must comply with the Securities laws. 

In an opinion statement, U.S. District Judge William H. Orrick, San Francisco Federal Court, stated that Kraken accepted that it was not registered with the SEC.

The reason is that the platform does not involve securities, so it does not fall under the SEC’s regulations and, therefore, does not require registration. 

However, considering the SEC’s allegations of Kraken’s transactions and the agency’s motion to dismiss the lawsuit, Judge Orrick denied the motion and added that the crypto firm should respond to the complaint within 20 days.

Celebrating the momentary joy against the SEC, a Kraken lawyer posted the win on his X profile. He stated that the Kraken tokens are not securities and added that the SEC cannot continue to regulate the industry through enforcement.

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