Kraken Fires Back at SEC, Arguing Agency’s Case Lacks Proper Wording
Kraken has intensified its legal battle with the United States Securities and Exchange Commission (SEC) by filing a reply to the agency’s April letter regarding the company’s motion to dismiss the case.
Kraken argues in the latest development that the SEC has not identified any specific investment contracts traded, brokered, or settled on its platform. The cryptocurrency exchange also highlighted the agency’s use of incorrect terminology in its argument.
Key points:
- Kraken accuses the SEC of using terms like “investment concept” and “ecosystem” instead of “investment contract” and “enterprise.”
- The exchange maintains that the SEC has not identified any specific investment contracts traded on its platform.
- Kraken’s filing follows the SEC’s charges against the company in November 2023 for operating as an unregistered broker, dealer, exchange, and clearing agency.
- The SEC has made similar allegations against other major crypto companies, including Binance and Coinbase Global.
- Kraken previously settled separate charges brought by the SEC against its staking business in February 2023.
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In its filing on Thursday, Kraken pointed out that the SEC used the terms “investment concept” and “ecosystem” several times in its argument instead of the legally recognized terms “investment contract” and “enterprise.”
Kraken contends the SEC’s discrepancy in wording
The exchange contends that this discrepancy in terminology undermines the SEC’s case and demonstrates a lack of specificity in identifying the alleged wrongdoing.
The SEC, in its April filing, attempted to justify its use of language by quoting case law. It stated that “the words themselves do not delimit the security type because ‘the reach of the act does not stop with the obvious and commonplace.'”
However, Kraken’s latest filing suggests that this explanation is insufficient and does not address the fundamental issue of identifying specific investment contracts.
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This latest development in the Kraken-SEC saga comes months after the SEC initially sued the exchange in November 2023, alleging that it failed to register as a broker, clearinghouse, or exchange.
The charges against Kraken were part of a broader crackdown by the SEC on the cryptocurrency industry. Similar allegations were also made against other major players, like Binance and Coinbase Global.
