- SEC files to dismiss Kraken’s “fair notice” and “major questions” defenses.
- Kraken’s team criticizes timing as a tactic to dodge scrutiny.
The U.S. Securities and Exchange Commission (SEC) is seeking to dismiss critical defences raised by crypto exchange Kraken in an ongoing lawsuit. In a motion filed in the Northern District Court of California, the SEC argued Kraken had received sufficient notice of potential securities violations. The legal team, however, labelled the timing of this filing as an “Election Day gambit,” asserting it’s an attempt by the SEC to avoid scrutiny over its policies.
The SEC’s motion targets Kraken’s claims of “fair notice” and the “major questions doctrine” defenses. These defenses are central to Kraken’s arguments that it lacked clear regulatory guidance. According to Kraken, these issues highlight the need for better regulatory clarity and protection against what it sees as SEC overreach.
Is the SEC Moving to Block Kraken’s Defenses?
Kraken’s legal team asserts the SEC had previously warned it about securities classifications for certain crypto assets. The SEC believes dismissing these defenses will reduce repetitive litigation, narrow down the discovery scope, and save resources. The agency’s filing suggests that they should not be allowed to “re-litigate” issues already addressed in similar cases.
Michael O’Connor, Kraken’s lead attorney, referenced the SEC’s earlier legal loss in the Ripple case, where a similar motion was denied. O’Connor criticized the SEC’s approach, accusing it of creating confusion through defective and inconsistent policies that have affected the broader crypto sector.
Kraken also argues that the SEC has blocked its attempts to register with the agency. They say its efforts have been hindered under SEC Chair Gary Gensler’s inconsistent enforcement. Kraken’s defence further contests the SEC’s designation of 11 cryptocurrencies, including Solana (SOL) and Cardano (ADA), as securities. Recently, they requested a jury trial to examine these issues in full.
The timing of the SEC’s filing, on Election Day, has prompted speculation about its motives. Rumors suggest Gensler may step down if there’s a change in administration, with analysts predicting that his departure could come by year-end.
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