Kraken Fights Back SEC Lawsuit, Argues Cryptos Are Commodities And Not Securities
By Benzinga
Cryptocurrency exchange Kraken has made a move to dismiss a lawsuit filed against it by the Securities and Exchange Commission (SEC).
What Happened: The SEC had previously sued Kraken in November, alleging that the exchange did not register as a broker, clearinghouse, or exchange and accusing the company of mixing customer and corporate funds. The lawsuit was filed in the Northern District of California.
In its motion to dismiss, Kraken argued that the cryptocurrencies listed in the SEC’s complaint should be treated as commodities, not securities, reported CoinDesk.
The exchange stated that the SEC did not allege fraud or consumer harm, only that Kraken operated as an unregistered securities exchange, broker-dealer, and clearing agency.
Kraken’s motion also claimed that the SEC did not “plausibly allege” that any of the cryptocurrencies listed in its complaint are securities or investment contracts. The exchange further argued that the SEC did not meet the requirements of the Howey Test, a Supreme Court precedent used to identify securities.
Why It Matters: Kraken accused the SEC of overstepping its jurisdiction and raised a Major Questions Doctrine issue. However, the exchange did not address the SEC’s allegations of commingling customer and corporate funds.
Major Questions Doctrine is a rule that says government decisions with a lot of impact need clear permission from Congress. If the rules aren’t clear, agencies aren’t allowed to make up their own powerful policies. This makes sure rules are backed by law and not just the agency’s own ideas.
Price Action: At the time of writing, Bitcoin (CRYPTO: BTC) was trading at $51,050, up 0.35% over the past 24 hours, as reported by Benzinga Pro.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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