Kraken Challenges SEC’s Case Accuracy in Ongoing Dispute

Kraken and the US Securities and Exchange Commission (SEC) remain embroiled in a dispute, as the crypto exchange filed a new document questioning the accuracy of the regulator’s case.

The development comes three months after Kraken filed a motion to dismiss the SEC’s lawsuit against it.

SEC’s Case Isn’t Worded Correctly

Kraken recently filed a response to the SEC’s April letter regarding the company’s motion to dismiss the case. In it, the exchange alleged that the securities regulator failed to identify any investment contracts that were traded, brokered, or settled on its platform.

The filing claims that the SEC used terms like “investment concept” and “ecosystem” instead of “investment contract” and “enterprise” in its argument.

The SEC had previously 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,’” citing case law.

Kraken was accused of operating as an unregistered securities exchange, broker, dealer, and clearing agency by the SEC.

According to the regulator, Kraken unlawfully facilitated the trading of crypto asset securities since at least September 2018, generating hundreds of millions of dollars. The charges were similar to the ones leveled against Binance and Coinbase.

Kraken: SEC Overstepping Regulatory Authority

Following the accusations, the firm and its representatives denied the SEC’s claims, opting to contest the lawsuit in court.

In February, Kraken argued that the Commission was overstepping its regulatory authority in its motion seeking to dismiss the lawsuit. It also contested that cryptocurrencies, particularly those mentioned in the SEC’s complaint, should be treated as commodities rather than securities.

Later that same month, the Chamber of Digital Commerce (CDC) filed an amicus curiae to back Kraken’s motion, which said,

“The SEC does not allege fraud. The SEC does not allege consumer harm. The SEC’s sole claims are that Kraken has somehow operated in plain sight for almost a decade as an unregistered securities exchange, broker-dealer, and clearing agency, in violation of the Exchange Act.”