Kraken's legal team, led by attorney Michael O'Connor, criticized recent attempts by the U.S. Securities and Exchange Commission (SEC) to dismiss key defenses raised by the exchange in its ongoing legal battle.
On November 6, Mr. O'Connor issued a statement regarding X, accusing the SEC's approach of being an attempt to “avoid discovery” of what he described as the SEC's flawed and inconsistent policies. These policies, he argued, would have a negative impact on the American economy.
O'Connor drew similarities between the SEC's current strategy against Kraken and a similar move that was attempted and failed in the Ripple case. He expressed confidence that the Kraken's defense would stand up to scrutiny.
However, he also questioned the timing of the SEC's complaint, noting that it came on a day when “the American people exercised their sovereign right to choose their political future.”
He also criticized SEC Chairman Gary Gensler, saying:
“Gary is technically 75 years old and knows his days are numbered. Yet he continues to reinforce his failed policies, now blatantly targeting the American people. It has become a rebellion.”
SEC motion
On November 5, the SEC filed a motion to dismiss Kraken's fair notice and material question doctrine defenses. The agency argued that this would streamline the discovery process and prevent exchanges from considering the same issues repeatedly.
The SEC said Kraken's claims of regulatory uncertainty were unsubstantiated and that the exchange had provided sufficient warning that its crypto products could be classified as securities.
The SEC asserted that digital assets are subject to federal securities laws, stating:
“Kraken may complain that previous decisions applying Howie did not include the specific fact that crypto assets are being resold on the public secondary market; It's not the kind of notice it requires. The law doesn't have to provide a precise blueprint of what is allowed and what is prohibited.”
The SEC originally filed suit against Kraken in November 2023, alleging that the exchange operated as an unregistered securities exchange, broker, dealer, and clearinghouse. Financial regulators claim that the cryptocurrency trading platform has been offering these services since September 2018, generating significant profits. The court rejected Kraken's attempt to dismiss the lawsuit in August.
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