Kraken requests jury trial in legal battle with the SEC over alleged securities law violations

Crypto exchange Kraken has officially requested a jury trial in its ongoing legal battle with the US Securities and Exchange Commission (SEC).

Last November, the SEC charged Kraken operates its crypto trading platform as an unregistered stock 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.

That request did not reach U.S. District Judge William H. Orrick, who refused the exchange’s filing last month, which found that the SEC “plausibly alleged that at least some of the cryptocurrency transactions Kraken facilitates on its network constitute investment contracts, and therefore securities, and are accordingly subject to the securities laws.”

In a new one document Kraken, filed in court Thursday, requests a jury trial and responds to the SEC’s complaint, arguing that it operated for more than a decade without any indication from the regulator that it violated securities laws.

“In 2021, the SEC chairman told Congress that ‘the exchanges that trade these crypto assets have no regulatory framework at the SEC,’ and that ‘only Congress could truly address this lack of a framework. ‘

Kraken has attempted to work with the SEC to allow registration. But the industry’s efforts have been stymied at every step, as the SEC has instead chosen to pursue a strategy of competing with its sister regulators for enforcement powers that its chairman admitted did not exist. This has predictably led to a patchwork of inconsistent and incompatible judicial decisions in an area that clearly needs a unified regulatory approach.”

Kraken says the SEC declined to identify which crypto asset transactions it classified as investment contracts until the regulator filed its complaint last year.

“The digital assets themselves cannot be the investment contracts because they do not carry any of the rights and obligations of a share of stock, a bond, or any other financial asset that Congress has said is subject to SEC regulation. The digital assets themselves are the only things that are traded, brokered or settled on Kraken.