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Leading digital asset trading platform Kraken seeks to dismiss the lawsuit filed to dismiss a November lawsuit from the United States Securities and Exchange Commission (SEC), claiming that the move from the regulator sets a “dangerous precedent” for the agency’s remit.
As reported earlier by TheCoinRise, Kraken was sued by the SEC in November 2023, and the agency alleged that the exchange created “risk for investors and taken in billions of dollars in fees and trading revenue from investors without adhering to or even recognizing the requirements of the U.S. securities laws that are designed to protect investors.”
Kraken Claps Back
The motion was filed by the crypto exchange on February 22, asking the court to dismiss the lawsuit filed by the SEC against Kraken, adding that it was a significant overreach on the agency’s part.
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As pointed out by Kraken in an accompanying blog post on February 22, the SEC’s theory “has no limiting principle” and would grant the SEC “boundless authority over commerce and potentially open up the floodgates to private securities law claims.”
Current Laws Do Not Cover Crypto
According to the blog post penned by Kraken, “current laws do not adequately cover the digital asset industry, and that Congress could do more to put in place a set of rules to better protect consumers and investors.”
“The SEC’s theory is that there can be an investment contract with no contract, no post-sale obligations, and no interaction at all between the issuer and the purchaser,” said the exchange.
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Kraken also noted that the SEC “relies on ambiguity and contradiction” in its approach to digital asset regulation, adding that it asked the court to consider “a new theory: Anything that may increase in value in an “ecosystem” can be an investment contract.”
Kraken Asks Crypto Innovators to Speak Up
Kraken noted that the SEC’s suit doesn’t contain any allegation, noting that the agency doesn’t “allege any profits were reasonably expected from a common enterprise beyond those created by fluctuations in the market.”
“Crypto innovators in the United States should not have to fear retaliation for their political speech. They should be free to earnestly advocate for better law and more efficient markets. They should be free from intimidation by a politically compromised agency,” said the exchange.
Expansion of Services
Kraken has decided to expand its services outside the United States and recently secured a Virtual Asset Service Provider (VASP) registration from the Dutch Central Bank (DNB). The digital asset exchange is also seeking partnerships with Polygon, Matter Labs, and the Nil Foundation in connection with the potential launch of its Layer-2 blockchain.