Kraken’s major defence dismissed in SEC lawsuit
This ruling is part of the SEC’s ongoing efforts to regulate the crypto industry, as seen in similar cases with firms like Coinbase and Binance.
The US Securities and Exchange Commission (SEC) has partially won its case against the crypto exchange Kraken. A California federal judge ruled on 24 January 2025, dismissing Kraken’s argument that Congress had not granted the SEC jurisdiction over the crypto market. Judge William Orrick decided that the SEC’s actions fell within powers that Congress could reasonably have delegated to the agency.
Kraken had invoked the ‘major questions doctrine,’ which argues that government agencies cannot exercise powers not specifically granted by Congress. Other crypto companies, such as Coinbase and Binance, have used this defence in similar cases. However, Judge Orrick noted that while cryptocurrency is growing, it has not reached an economic significance comparable to other sectors like energy or student loans.
Despite this, the court allowed Kraken’s ‘fair notice’ defence to remain in place. Kraken claimed it wasn’t adequately informed by the SEC about how its activities might violate securities laws. The case, which began in November 2023, is part of the SEC’s ongoing efforts to regulate the crypto industry, with Kraken accused of operating without proper registration as a securities exchange.
