SEC lawsuit against Kraken to proceed: ruling

A California judge has denied Kraken’s request to dismiss the SEC lawsuit, finding the Commission’s crypto securities argument admissible.

On August 23, U.S. District Judge William H. Orrick ruled that crypto exchange Kraken must file a lawsuit with the Securities and Exchange Commission alleging securities violations. The SEC complaint, filed in November 2023, alleged that some blockchain transactions conducted on Kraken’s platform qualified as investment contracts under the Howey Test.

Judge Orrick found merit in the agency’s argument that cryptocurrencies including Cardano (ADA), Polygon (MATIC), and Solana (SOL) likely fall under the federal securities laws, finding merit in the argument.

Cryptocurrency advocates had previously celebrated Solana’s dismissal from the SEC’s complaint against Binance, calling the outcome a positive one for SOL and other altcoins.

The San Francisco federal court issued its opinion nearly four months after Kraken filed to dismiss the lawsuit citing false statements. Kraken reportedly considered an initial public offering and another fundraiser following its May dismissal.

SEC largely anti-crypto under Gensler

Crypto stakeholders are accusing the SEC, chaired by Gary Gensler, of taking a hostile approach towards digital assets. Blockchain service providers argue that the regulator has failed to provide clear policies and registration guidelines to the industry.

Gensler and the SEC have rejected the chorus of so-called “forced regulation” of the cryptocurrency market, scolding businesses and players for ignoring securities laws.

According to Gensler, the digital asset ecosystem needs to be more compliant. Based on this stance, the SEC has filed lawsuits against several major organizations, including Binance, Coinbase, Kraken, and Ripple.

Despite partial losses due to XRP retail sales against Ripple, SEC lawsuits against crypto giants have continued in court. Many Web3 community members believe that the SEC and other three-letter agencies are implementing “Operation Choke Point 2.0,” President Joe Biden’s administration’s plan to eliminate crypto from America’s financial system.