A judge has denied Kraken’s request to dismiss claims from the U.S. Securities and Exchange Commission (SEC) alleging that the exchange violated securities laws.
Last November, the SEC accused Kraken of operating its crypto trading platform as an unregistered securities exchange, broker, dealer and clearing agency.
Earlier this year, Kraken filed a motion in the US District Court to dismiss these charges, arguing that the SEC’s claims would broaden the definition of investment contracts and expand the regulator’s jurisdiction beyond its delegated responsibility.
On Friday, U.S. District Judge William H. Orrick denied the exchange’s request, ruling that the SEC “plausibly alleged that at least some of the cryptocurrency transactions Kraken facilitates on its network constitute investment contracts, and thus securities, and are accordingly subject to effects. laws.”
The SEC says Kraken offered more than 11 different “crypto asset securities” on its platform and was legally required to register with the regulator.
These alleged securities include Cardano (ADA), Algorand (ALGO), Cosmos (ATOM), Filecoin (FIL), Flow (FLOW), Internet Computer (ICP), Decentraland (MANA), Polygon (MATIC), Near Protocol (NEAR) , OMG Network (OMG) and Solana (SOL).
Judge Orrick noted that the SEC only had to plausibly allege that at least one of those crypto assets was an investment contract to move forward with the lawsuit, so he focused only on Solana and Algorand in his ruling, outlining descriptions of both projects on the Kraken website. .
explains Orrick,
“The SEC plausibly alleged that investors in crypto assets offered on Kraken had an expectation of profit from the efforts of others that they inferred from the promoters’ statements that Kraken republished and reaffirmed on its platform. Whether the record ultimately supports this allegation will be revealed through discovery.”
The judge also said a proposed case schedule and trial date will be submitted in October.
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