Kraken will continue its legal battle with the SEC after a U.S. judge rejected its request to dismiss the lawsuit. According to the judge, the regulator made a “plausible” claim that some cryptocurrency transactions on Kraken’s platform could be considered investment contracts, and therefore securities subject to securities laws.
Kraken will have to continue to fight against the SEC
In a notice filed Friday, a U.S. judge denied Kraken's request to dismiss the Securities and Exchange Commission's (SEC) charges against it.
The American cryptocurrency exchange had previously defended itself against the complaint filed by the SEC last November by arguing in particular that the regulator was abusing its power and claiming that it did not offer cryptocurrencies considered as securities on its platform.
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But the judge representing the US court said the SEC had indeed alleged ” plausible ” that ” Some of the cryptocurrency transactions that Kraken enables on its platform constitute investment contracts, and therefore securities, and are therefore subject to securities laws. ” The judge also noted that the ADA, ALGO, ATOM, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG and SOL tokens are considered securities by the SEC.
Note that the judge did not rule in favor of the SEC, but rather allowed the stakeholders to continue to assert their rights or accusations.. The justice representative also pointed out that the terminology used by the regulator was rather confusing and that this did not necessarily work in its favor. At the same time, he asked it to provide a more detailed analysis of the transactions taking place directly on the Kraken platform.
For its part, Kraken has 20 days to respond officially.
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Despite everything, a small victory?
Marco Santori, Kraken's legal director, issued a statement on X, saying the judge's decision reflected ” an important victory for Kraken, for the principle of clarity and for cryptocurrency users around the world, ” and drawing a parallel with the Ripple case, in which it is more a question of studying the investment contracts around a token rather than the nature of the token itself.
According to him, the SEC will have to redouble its efforts if it really wants to prove that the cryptocurrency exchange platform Kraken allows the trading of securities, and this by invoking the famous Howey test.
The SEC has completely lost on this “tokens are securities” theory and will no longer be allowed to rely on it going forward. Instead, it will have to prove, for each alleged transaction on Kraken, that the Howey test factors are satisfied.
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Finally, Marco Santori indicated that ” to bring clarity to the industry, protect consumers and foster the growth of blockchain technology, » It was now necessary for Congress to “adopt a comprehensive framework for market structure “.
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Source: Court document
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