Key takeaways
- The US Securities and Exchange Commission (SEC) has filed for the dismissal of Kraken’s defenses in the ongoing lawsuit.
- The Kraken legal team criticized the regulator’s motion as a move to avoid discovery.
- SEC’s filing, which coincides with the US election day, has attracted suspicion, as some labeled it an “Election Day gambit.”
The SEC Seeks To Dismiss Kraken’s Defenses In Lawsuit
The US Securities and Exchange Commission (SEC) filed a motion in the Northern District Court of California regarding its lawsuit with Kraken. According to the filing, the regulator seeks to dismiss Kraken’s key defenses in the legal battle.
The crypto exchange had presented strong defenses against the SEC’s allegation that it operates with registration. The SEC said Kraken received fair notice last year when it charged the crypto exchange with securities law violation by offering digital assets as investment contracts.
Further, the regulator seeks to waive Kraken’s defense statement regarding the absence of clarity around US securities laws and their application to the crypto.
In its filing, the SEC pointed out that Kraken’s eighth, ninth, and tenth defense responses to the major questions doctrine and due process violations fall short of the law.
Meanwhile, Kraken presented these defenses as key arguments protecting its operations from regulatory overreach.
Notably, the regulator anchors its regulatory measures on the fact that federal securities laws apply to all digital assets offered as investments. Moreover, this regulatory approach has sparked legal battles with several crypto-related entities.
The filing stated: “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 relitigate the same issues repeated at every possible stage of this case.”
Kraken Accuses The SEC Of Circumventing Scrutiny
On its part, Kraken has slammed the SEC for trying to dodge the correct investigatory procedures in the legal battle. According to the exchange’s attorneys, the securities regulator wants to conceal its “defective and inconsistent policies.”
The exchange criticized the SEC for filing its motion on the US election day. One of its lawyers, Michael O’Connor, called the SEC’s motion an “Election Day gambit.” He cited some similarities in the lawsuit to the Ripple case, where the court rejected a similar SEC motion.
Further, O’Connor expressed optimism about Kraken’s successful defense front in the lawsuit.
Meanwhile, the suit reflects the overall tension within the crypto space based on the SEC’s regulatory approaches. The regulator has sued other crypto firms, including Coinbase and Binance.
The SEC also classified up to eleven crypto assets, including Cardano (ADA), Solana (SOL), and Polygon (MATIC), as securities. This move prompted Kraken’s challenge as the crypto exchange called a jury trial over the classification.
The SEC filing came as the crypto community remains optimistic about a positive shift in the industry through Trump’s presidential win.
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