SEC seeks to dismiss Kraken’s three main defenses in US lawsuit

The U.S. Securities and Exchange Commission (SEC) asked the U.S. District Court for the Northern District of California to dismiss three of Kraken’s defenses against allegations that the cryptocurrency trading platform engaged in illegal conduct. In a motion filed on Nov. 5, the regulator dismissed Kraken’s allegations that securities laws are unclear and how they apply to virtual assets, as well as its assertion that the exchange was not given fair notice that its actions were considered to violate securities laws. It also asked the court to dismiss Kraken’s “substantial issues doctrine” defense. The doctrine is a legal principle established by the Supreme Court that states that agencies cannot expand their regulatory powers without explicit authorization from Congress. In November 2023, the SEC sued Kraken for operating a platform as an unregistered securities exchange, broker, dealer, and clearinghouse. The SEC said it believed Kraken had illegally earned hundreds of millions of dollars by facilitating the buying and selling of crypto asset securities since September 2018. Kraken filed to dismiss the case, and the motion was denied in August.