Kraken’s defences face dismissal in SEC’s cryptocurrency lawsuit

The US Securities and Exchange Commission (SEC) has requested a federal court to dismiss three key defences presented by cryptocurrency exchange Kraken in a lawsuit accusing the platform of securities violations. The SEC’s motion, filed on 5 November, seeks to invalidate Kraken’s argument that it lacks clear legal guidance on which digital assets qualify as securities. The SEC contends that existing securities laws are clear enough and that Kraken was fully aware of potential breaches.

Kraken’s defences include invoking the “major questions doctrine,” which argues the SEC needs explicit Parliamentary approval to regulate digital assets as securities. Kraken also claims that it did not receive adequate notice of which aspects of its operations may violate securities laws. The SEC rejected these claims, labelling the defences as attempts to delay proceedings by complicating the evidence process.

According to the SEC, dismissing Kraken’s defences would simplify the case, reducing unnecessary document requests and preventing delays in reaching a verdict. Kraken initially attempted to dismiss the case in August, but the court ruled in the SEC’s favour, allowing the lawsuit to proceed. The outcome could have significant implications for the SEC’s regulatory authority over digital assets in the cryptocurrency industry.