The U.S. Securities and Exchange Commission (SEC) has filed a motion in the Northern District Court of California to dismiss key defenses raised by crypto exchange Kraken in an ongoing legal dispute.
The SEC argues that Kraken received sufficient notice regarding potential securities law violations linked to offering certain crypto assets as “investment contracts.”
The motion, filed on Election Day, has drawn criticism from Kraken’s legal team, who labeled the timing a strategic move to avoid transparency during the discovery process.
Kraken Lawyers Accuse SEC of Dodging Scrutiny
The Kraken lawyers argue the SEC’s actions aim to sidestep scrutiny of its “defective and inconsistent policies.”
Central to the SEC’s filing is the dismissal of Kraken’s defenses, including claims based on the major questions doctrine and alleged violations of due process.
The SEC claims that Kraken’s claims lack merit, maintaining that the exchange was adequately warned about the potential classification of its crypto offerings as securities.
The agency also argues that dismissing Kraken’s defenses would streamline the legal process and prevent unnecessary re-litigation of settled issues.
Kraken’s attorney, Michael O’Connor, criticized the SEC’s motion as an “Election Day gambit,” citing similarities to the Ripple case, where a comparable SEC motion was rejected.
O’Connor expressed confidence in Kraken’s ability to defend its position successfully.
The case also highlights broader regulatory tensions. Kraken has called for a jury trial, challenging the SEC’s classification of 11 cryptocurrencies—including Solana (SOL), Cardano (ADA), and Polygon (MATIC)—as securities.
Additionally, the exchange alleges that repeated attempts to register with the SEC were met with resistance, accusing Chair Gary Gensler of inconsistent application of securities laws.
Speculation around Gensler’s tenure has intensified following projections of a Donald Trump election win.
Analysts suggest Gensler could resign by year-end, following historical trends of SEC leadership changes during administration transitions.
Kraken Launches Crypto Derivatives Suite for Australian Clients
Kraken has introduced a new suite of crypto derivatives tailored for Australian wholesale clients, designed to align with regulatory requirements after facing a recent legal setback in the country.
The launch reflects Kraken’s commitment to the Australian market and its efforts to provide secure and compliant services for institutional investors amid a changing regulatory landscape.
Kraken’s new derivatives offering enables institutional clients to gain exposure to cryptocurrency price movements through futures derivatives without the need to hold the underlying assets.
Just recently, Kraken raised concerns about the lack of regulatory clarity in Australia following a Federal Court ruling against its fiat margin trading product.
The exchange said that Australian crypto businesses and investors continue to operate in a “confusing and uncertain regulatory environment.”
The exchange emphasized that the court’s decision underscores the broader issue of regulatory ambiguity in the country’s approach to cryptocurrency.
The crypto market in Australia has seen significant growth over the past few years in terms of ownership and adoption.
As reported, the crypto ownership rate in Australia is 17%, which is higher than the global average of 15%.
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