Kraken Fires Back: Files Motion to Dismiss SEC Lawsuit, Alleges Political Motives Behind Charges

Kraken Fires Back: Files Motion to Dismiss SEC Lawsuit, Alleges Political Motives Behind Charges

Crypto News – Kraken has taken action by filing a motion on Thursday to dismiss the lawsuit brought against it by the Securities and Exchange Commission (SEC) in November. The lawsuit leveled multiple accusations against the crypto exchange, including operating without registration, failing to prevent conflicts of interest, and commingling client funds.

In response, Kraken issued a blog post on Thursday asserting that the SEC’s claims are unfounded. The agency alleges that Kraken operates an unlicensed platform for “investment contracts” without establishing any contractual agreements between Kraken users and token issuers. Kraken refutes this, stating that none of the assets mentioned in the SEC’s complaint meet the legal definition of investment contracts. Furthermore, Kraken contends that crypto tokens do not pass the Howey test, commonly used by U.S. authorities to classify securities as investment contracts.

Kraken emphasizes that the SEC lawsuit does not accuse them of fraud or misconduct toward customers, raising doubts about the foundation of the legal claim. Kraken warns that allowing the SEC to proceed with such claims could set a dangerous precedent for regulatory overreach.

CEO Dave Ripley suggested in a forum post that the SEC’s allegations are politically motivated. He highlighted the timing of the lawsuit, which came shortly after Kraken testified about the SEC’s “overreach in crypto” before congressional committees. Ripley argues that crypto innovators in the U.S. should not face repercussions for political speech, urging for fair treatment amid regulatory scrutiny.

The SEC’s lawsuit against Kraken follows a $30 million fine imposed by the agency less than a year ago for the exchange’s crypto-staking business.