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Kraken, one of the major cryptocurrency exchanges, was sued by the SEC last November in the Northern District of California. The ongoing legal battle between cryptocurrency exchange Kraken and the SEC has taken a significant turn. On August 23, U.S. District Court Judge William H. Orrick of the Northern District of California ruled that the SEC’s lawsuit against Kraken will proceed to trial, rejecting its motion to dismiss the case. History of Kraken Lawsuit The SEC sued one of the biggest crypto exchanges, Kraken in November 2023. It argued that the crypto exchange has violated federal securities law as it did not register with the agency as a broken or exchange. In its complaint, the SEC requested that strict penalties should be charged against Kraken and it should be prohibited from further securities violations. This lawsuit is a part of the SEC’s major crackdown on crypto exchanges for similar violations. Binance and Coinbase just like Kraken tried to dismiss their respective cases but failed. The Ruling The US District Court states that according to the SEC, at least some of the crypto transactions on Kraken platform are investment contracts and hence they are securities. And as per the securities law, they should be registered under the SEC. This decision is based on the Howey Test, however Kraken argued that cryptos do not meet this test criteria. And for this reason, cryptocurrencies should not be classified or treated as securities. Kraken is not the first crypto exchange to provide this statement, however the SEC is not satisfied with it. It wants Kraken to get civil penalties. The Judge Orrick agreed that none of the cryptos listed on Kraken are securities; however, he added that the contracts surrounding their sale could be considered as securities. The distinction is very critical  as it…

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Filed under: News - @ August 27, 2024 1:12 am