Kraken Warns SEC’s Claims Could Reorder US Financial Structure

cryptonews.com:

Crypto exchange Kraken urged the US court to dismiss the SEC claims against it to avoid a “significant reordering” of the US financial regulatory structure.

In November 2023, the Securities and Exchange Commission (SEC) initiated a lawsuit against Kraken. The SEC, alleging it had been operating an unregistered securities trading platform.

This suit came months after settling charges over Kraken’s former staking service.

In February 2024, Kraken filed to dismiss the lawsuit, contending that it relied solely on a registration-based argument regarding Kraken’s operation as an unlicensed securities entity.

Kraken argued that cryptocurrencies listed as SEC-compliant should be treated like commodities and not securities.

However, now Kraken has escalated its position, urging the court to dismiss the claims to avoid a “significant reordering” of the US financial regulatory structure, according to court filings submitted in the Northern District of California on Thursday.

The SEC filed an opposition to Kraken’s motion to dismiss, asserting that its enforcement action falls within its congressionally granted authority. They emphasize its role in enforcing registration requirements for securities intermediaries.

“In applying the Howey test in its determination that Kraken must register, the SEC is simply following its Congressional mandate.”

They also stated that it’s not overstepping its powers and doesn’t need to “enact bespoke laws to each new technology that emerges.”

Kraken’s response to the SEC’s motion centers on interpreting the SEC’s jurisdiction through the Howey test.

This assesses whether an investment qualifies as a security based on 4 main criteria: an investment of money, expectation of profits, common enterprise, and