Chamber of Digital Commerce Defends Kraken Against SEC Lawsuit, Calls for Legislative Clarity on Crypto Regulation

Chamber of Digital Commerce Defends Kraken Against SEC Lawsuit, Calls for Legislative Clarity on Crypto Regulation

Crypto News – In recent court filings dated February 27th, the Chamber of Digital Commerce (CDC) has submitted an amicus curiae brief in defense of the cryptocurrency exchange Kraken against the ongoing lawsuit brought forth by the United States Securities and Exchange Commission (SEC).

The CDC elucidated that the intent behind their amicus brief is to halt the SEC’s efforts to regulate the digital asset industry solely through enforcement actions without the requisite legislative authority.

In a statement released by the CDC, they emphasized the inadequacy of enforcement measures alone, asserting that while Congress is actively seeking solutions, the SEC’s aggressive regulatory approach impedes innovation. The CDC contended that fair and transparent regulations could foster economic growth, facilitate job creation, and promote financial inclusion.

Furthermore, the trade body refuted the SEC’s assertion that securities laws should extend to govern all digital asset transactions, arguing that such an expansion is legally untenable. They underscored that digital assets inherently differ from traditional investment contracts and should not be treated as such under the law.

Highlighting the broader ramifications of the SEC’s enforcement stance, the CDC warned that it poses a significant threat to the widespread adoption and progress of blockchain technology. They emphasized the potential adverse effects on the trillion-dollar digital asset market and, consequently, the broader U.S. economy.

The filing notably referenced previous high-profile cases where the SEC did not achieve entirely favorable outcomes, including disputes involving Ripple and Terraform Labs.

The SEC initiated legal action against Kraken in November 2023, alleging that the exchange operated as an unregistered securities exchange, broker, dealer, and clearing agency. Kraken and its representatives have vehemently denied these allegations and are vigorously contesting the case in court. Most recently, Kraken filed a motion to dismiss the lawsuit on February 23rd, emphasizing that the accusations primarily revolve around failure to register rather than fraudulent activities.

The CDC affirmed its support for Kraken’s motion to dismiss in its latest filing.

It’s important to note that this lawsuit is distinct from a prior case involving Kraken’s staking services. Kraken settled with the SEC for $30 million and ceased offering those services in the U.S. in February 2023.

Additionally, two other major cryptocurrency exchanges, Coinbase and Binance, are embroiled in similar SEC lawsuits alleging unregistered exchange operations, with proceedings commencing in June 2023.