Kraken, a prominent U.S.-based cryptocurrency exchange, has formally requested a jury trial in the legal battle initiated by the U.S. Securities and Exchange Commission (SEC), according to a recent court filing.
The filing comes after a California judge ruled last month that the SEC’s lawsuit against Kraken would proceed to trial. This lawsuit mirrors similar cases brought by the SEC against other major exchanges like Binance and Coinbase, which have also been accused of violating federal securities laws by not registering as a broker, clearinghouse, or exchange.
The SEC initially filed the lawsuit in the Northern District of California last November, seeking to permanently block Kraken from violating securities laws. The regulator demanded disgorgement of the exchange’s “ill-gotten gains” along with other civil penalties. Specifically, the SEC identified 11 tokens, including ADA, ALGO, ATOM, FIL, and SOL, as unregistered securities, allegedly offered and sold on Kraken’s platform without proper registration.
In its Thursday filing, Kraken addressed all of the SEC’s allegations and put out eighteen legal defenses, all of which were strongly denied being illegal.
The exchange’s claim is based on its interpretation of the Securities Act and the Exchange Act, which states that neither legislation explicitly encompasses digital assets. Kraken claimed that it was never required to register with the SEC since it does not operate as a broker-dealer, exchange, or clearinghouse under the terms of those acts.
Kraken’s legal defense argues that digital assets are not “investment contracts” and therefore don’t fall under the SEC’s jurisdiction. The company claims these tokens lack the characteristics of traditional securities like stocks or bonds, accusing the SEC of overreaching by applying outdated laws to the evolving crypto market.
Kraken accused the SEC of violating due process and unfairly targeting it for exercising First Amendment rights. The exchange argued that its services, like margin trading and OTC trading, don’t make it a securities exchange, clearinghouse, or broker-dealer.
As Kraken gears up for a jury trial, the outcome of this case could have significant implications for the broader cryptocurrency industry.
Also Read: Federal Court Rejects Kraken’s Bid to Dismiss SEC Lawsuit
