The crypto exchange Kraken has officially requested a jury trial in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).
Last November, the SEC charged Kraken with operating its crypto trading platform as an unregistered securities exchange, broker, dealer and clearing agency.
Earlier this year, Kraken filed in US District Court to dismiss those charges, positing that the SEC’s claims would widen the definition of investment contracts and expand the regulator’s jurisdiction outside of its delegated responsibility.
That request didn’t fly with US District Judge William H. Orrick, who denied the exchange’s request last month, ruling that the SEC “plausibly alleged that at least some of the cryptocurrency transactions that Kraken facilitates on its network constitute investment contracts, and therefore securities, and are accordingly subject to securities laws.”
In a new document filed in court on Thursday, Kraken requests a jury trial and responds to the SEC’s complaint, arguing that it operated for more than a decade without any hint from the regulator that it was violating securities laws.
“In fact, in 2021, the Chair of the SEC told Congress that ‘the exchanges trading in these crypto assets do not have a regulatory framework at the SEC,’ and ‘it is only Congress that could really address this lack of a framework.’
Kraken has tried to work with the SEC to make registration feasible. But the industry’s efforts have been stonewalled at every step, as the SEC has instead chosen to pursue a strategy of fighting with its sister regulators for enforcement authority its Chair admitted it did not have. This has predictably led to a patchwork of inconsistent and irreconcilable court decisions in an area that is plainly in need of a uniform regulatory approach.”
Kraken says the SEC refused to identify which crypto asset transactions it classified as investment contracts until the regulator filed its complaint last year.
“The digital assets themselves cannot be the investment contracts because they carry none of the rights and obligations of a share of stock, a bond, or any other financial asset that Congress has said is subject to SEC regulation. The digital assets themselves are the only things that are traded, brokered, or settled on Kraken.”
The SEC argues that Kraken hawked more than 11 different “crypto asset securities” on its platform and was required by law to register with the regulator.
Those alleged securities include Cardano (ADA), Algorand (ALGO), Cosmos (ATOM) and Solana (SOL), among others.
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