U.S. District Judge William H. Orrick has ruled that the U.S. Securities and Exchange Commission may file a lawsuit against cryptocurrency exchange Kraken.
According to the judge, the SEC's lawsuit against Kraken will continue.
The U.S. Securities and Exchange Commission's lawsuit against cryptocurrency exchanges will proceed, a judge has ruled.
U.S. District Judge William Orrick denied Kraken's motion to dismiss the SEC's lawsuit on Friday, August 23, 2024. In court documents filed on Friday, the judge noted that the regulator's allegations that the cryptocurrency exchange was offering unregistered securities were plausible.
“Kraken does not deny that it has never registered with the SEC, but states that it is not required to register because the transactions it conducts on its platform do not involve securities and are not within the scope of the SEC's regulation. The SEC plausibly alleges, however, that at least some of the cryptocurrency transactions that Kraken facilitates on its network constitute investment contracts, i.e., securities, and are therefore subject to the securities laws,” Judge Orrick wrote in his decision.
Solana is suspected of being an unregistered security
In its lawsuit against Kraken, the SEC listed 11 cryptocurrencies that were allegedly sold as investment contracts: Cardano (ADA), Algorand (ALGO), CosmosHub (ATOM), Filecoin (FIL), Flow (FLOW) and Internet Computer (ICP).
Others include Decentraland (MANA), Polygon (MATIC), Near (NEAR), OMG Network (OMG), and Solana (SOL).
The judge's opinion, stated as part of the ruling, was that “to make its case viable, the SEC need only plausibly allege that at least one of these crypto assets is traded as an investment contract.”
The SEC has sued several cryptocurrency exchanges, including Binance and Coinbase. The regulator filed a lawsuit against Kraken in November 2023.
