- SEC's motion against Kraken targets "fair notice" and "major questions doctrine" defenses.
- Kraken argues need for clarity in SEC's crypto regulations as legal battle continues.
- SEC aims to expedite proceedings, citing efficiency and resource conservation.
The US securities regulator, the SEC, has recently sought to heighten the legal tussle with Kraken, a San Francisco-based crypto exchange, by filing a plea to dismiss some of the exchange’s defenses, including ‘fair notice’ and ‘major questions doctrine.’ The motion was filed in the Northern District Court of California. Its goal is to minimize further legal proceedings and prohibit the investigation of the SEC's practices.
Kraken replied by suggesting that it had never received adequate guidance from the regulators regarding its activities and that the SEC’s enforcement actions were inappropriate and unclear. This is an important legal approach based on the argument that outstanding regulatory measures should not be implemented if Congress had not approved them by endorsing the major questions doctrine.
Implications of the SEC's Legal Strategy
The SEC's filing asserts that Kraken was adequately informed about the securities classification of its crypto assets, describing the exchange's claims of regulatory ambiguity as baseless. By aiming to curtail the scope of discovery, the SEC hopes to expedite the legal process and conserve resources. This move follows a pattern observed in the Ripple case, where the SEC's similar motions were not upheld, suggesting a potentially challenging path ahead in its efforts against Kraken.
Michael O’Connor, representing Kraken, has criticized the timing of the SEC's motion—coinciding with significant political developments—as a strategic move to solidify the current administration's regulatory framework ahead of potential shifts in leadership following the recent presidential election. This aspect highlights the broader industry's call for more transparent and consistent regulatory guidelines, particularly as the U.S. sees a transition in government that could influence future SEC policies.
Industry Reaction and Future Outlook
The lawsuit against Kraken has raised much controversy over regulating cryptocurrencies in the United States of America. The exchange has requested a jury trial to address SEC allegations of operating as an unregistered securities exchange involving popular cryptos like Solana, Cardano, and Polygon.
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