Kraken, a cryptocurrencycurrency exchange, is defending itself against a lawsuit that was brought in November by the Securities and Exchange Commission (SEC) alleging that it was running an unregistered securities exchange.
Kraken contends that by neglecting to list any investment contracts or exchanges between token issuers and buyers on its platform, the regulator’s legal foundation is seriously faulty in a move to dismiss filed on Thursday.
According to the SEC complaint, Kraken provided unlicensed and unprotected assistance for unlawful securities trading. The exchange maintains, meanwhile, that it only provides spot trading of digital assets and not securities that must adhere to securities regulations. Kraken contends that this establishes a “dangerous precedent” for the authority of the agency.
A blog post on Kraken claims that the SEC’s position is that an investment contract might exist without a contract, after-sale duties, or communication between the issuer and the buyer.
Kraken claims the SEC has no basis for its charges and demand for financial penalties in the absence of evidence of actual securities being traded or demonstrable harm to clients. According to the company, letting the case go forward might lead to significant regulatory overreach.
A similar SEC case against market leader Binance coincided with the Kraken lawsuit, indicating an assertive approach to regulating digital asset exchanges. Similar to its contemporaries, Kraken is retaliating violently against the regulator it feels is abusing its power. This month, the three exchanges submitted moves to dismiss, paving the way for significant court cases over cryptocurrencycurrency regulation this year.
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