Former SEC Official Explains Why Kraken Is Suffering Massive Losses

Former SEC official John Reed Stark has described the recent ruling in the SEC’s case against Kraken as a major victory for the regulator.

In a significant development, Judge William Orrick denied Kraken’s request to dismiss the closely-watched lawsuit.

The SEC had sued Kraken last November, accusing it of offering unregistered securities, including some prominent cryptocurrencies like Cardano (ADA) and Solana (SOL).

In an attempt to turn the ruling in his company’s favor, Kraken’s chief legal officer Marco Santori described the decision as a major win, noting that the judge dismissed the term crypto asset insurance as inaccurate.

The judge also noted that this linguistic error does not negate the regulator’s theory that Kraken is involved in trading unregistered securities.

The judge ruled that secondary sales of crypto assets on Kraken largely met the criteria of the Howey test, which is used to determine whether a particular asset is a security token under U.S. law. Stark noted that Ripple’s recent decision has no legal value as a precedent in any U.S. court.