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Cryptocurrency exchange Kraken takes a proactive stance against the SEC's November lawsuit, filing a motion to dismiss the charges. Kraken challenges the SEC's claims, emphasizing flaws in the agency's arguments and questioning the absence of identified "investment contracts" in their complaint.
Kraken Counters SEC Allegations
Kraken, a prominent cryptocurrency exchange, has filed a motion to dismiss the Securities and Exchange Commission's (SEC) November lawsuit. The SEC accused Kraken of operating without registration, failing to prevent conflicts of interest, and commingling client funds. In response, Kraken published a blog post asserting that the SEC's claim is flawed. The agency alleged that Kraken operates an unlicensed platform for "investment contracts" without specifying any "contract" between Kraken users and token issuers. Kraken challenges this by stating, "None of the assets in the SEC’s Complaint are investment contracts under the law." The exchange further argues that crypto tokens do not meet the criteria of the Howey test, a standard used by U.S. authorities to define securities as "investment contracts." Kraken contends that the SEC's theory implies an investment contract without a contract, post-sale obligations, or any interaction between the issuer and the purchaser. [embed]https://twitter.com/davidlripley/status/1760829432292405368[/embed]
Questioning Legal Basis and Political Motivations
Kraken questions the legal basis of the SEC's lawsuit, asserting that the agency did not accuse them of fraud or customer disservice. The exchange warns that allowing the SEC to proceed with the claim could set a "dangerous precedent for agency overreach." Kraken CEO Dave Ripley goes further, suggesting political motivations behind the SEC's actions. Ripley claims that the accusations are politically driven, highlighting the SEC's swift response to Kraken's testimony about regulatory overreach in crypto before congressional committees. In light of these allegations, Kraken emphasizes that crypto innovators in the U.S. should not face retaliation for their political speech, advocating for fair and constructive regulatory rulemaking.