SEC files to dismiss Kraken’s defenses, arguing fair notice of securities violations, while Kraken claims SEC policies are inconsistent.
The U.S. Securities and Exchange Commission (SEC) has filed a motion in the Northern District Court of California to dismiss key defenses raised by Kraken in its ongoing legal battle. The SEC argues that Kraken had prior fair notice when it was charged last year with violating securities laws by offering crypto assets as “investment contracts.”
This motion, filed on Tuesday, aims to dismiss Kraken’s allegations concerning the major questions doctrine and violation of the due process clause. Kraken claims these defenses are necessary to shield its business from financial authorities’ overreach.
Kraken’s legal counsel has accused the SEC of moving the goalpost by filing the motion on Election Day. They say this is a tactic to avoid a probe into the SEC’s illogical and rigid policies. Michael O’Connor, Kraken’s attorney, called the move an ‘Election Day gambit’, implying that it attempts to manipulate the case without enough scrutiny. O’Connor said he was sure that Kraken would be protected, and he referred to the Ripple case, where such a motion was recently quashed.
SEC Motion Could Impact Kraken’s Legal Strategy in Ongoing Lawsuit
The SEC still insists that Kraken’s claim of regulatory uncertainty is “baseless.” The agency said this should alert Kraken that its crypto offerings could be considered securities under the law. The SEC’s motion further strengthens its argument that federal securities laws regulate digital assets offered as investments. This position has led to constant altercations between the SEC and cryptocurrency companies.
Moreover, the SEC claims that if its motion is granted, it will simplify the case and dismiss Kraken’s defenses. The agency says this will ensure that discovery is limited to its proper scope. This will reduce the risk of Kraken litigating the same issues at every case level.
On the other hand, Kraken has claimed that SEC has been unresponsive to its registration request, which it has tried to submit to the agency multiple times. Kraken has accused SEC Chair Gary Gensler of selectively applying securities laws to disadvantage the crypto industry. The SEC’s motion comes amid speculation that Gensler may soon step down. Many believe he could resign if Donald Trump wins the presidency. Analysts predict Gensler might leave by the end of the year. This follows the precedent of SEC chairs stepping down during a change in administration.
