SEC Moves to Strike Down Kraken’s Key Legal Defenses in Crypto Securities Case

The U.S. Securities and Exchange Commission (SEC) has intensified its legal battle against cryptocurrency exchange Kraken, filing a motion on November 5 to dismiss three of the company’s primary defenses in an ongoing securities law violation case.

In its filing with the Northern District Court of California, the SEC challenged Kraken’s arguments regarding the lack of regulatory clarity in crypto markets and the exchange’s claims that it wasn’t given adequate notice about securities law violations. The regulator also sought to reject Kraken’s defense based on the “major questions doctrine,” which questions whether the SEC has congressional authorization to regulate digital assets.

The motion follows the court’s August decision to deny Kraken’s attempt to dismiss the original lawsuit, which was filed in November 2023. The SEC alleges that since September 2018, Kraken has generated hundreds of millions of dollars by operating as an unregistered securities exchange, broker, dealer, and clearing agency.

“The Court should dismiss these defenses to help maintain the proper scope of discovery, narrow summary judgment, save judicial and party resources,” the SEC argued in its filing, expressing concern that Kraken might attempt to “re-litigate the same issues repeatedly at every possible stage of this case.”

The case highlights ongoing tensions between the crypto industry and U.S. securities regulators, particularly as the sector anticipates potential regulatory changes following Donald Trump’s recent presidential election victory. Industry observers note that the outcome of this legal battle could have significant implications for how digital assets are regulated in the United States.