The U.S. Securities and Exchange Commission has filed a motion in California's Northern District Court to dismiss key defenses filed by Kraken in the ongoing legal dispute between the pair.
The regulator argues that Kraken received fair notice last year when it charged the exchange for violating securities laws by offering crypto assets as “investment contracts.” Movement Entered on Tuesday.
The timing of the SEC's decision — which was filed on Election Day — drew criticism from Kraken's legal team, which it viewed as a ploy to avoid “the SEC's exposure to flawed and inconsistent policies.”
The agency wants to eliminate Kraken's substantive claims doctrine and due process violations — defenses Kraken argues are critical to protecting its operations from regulatory leaks.
The SEC contends that Kraken's lack of regulatory transparency is “without merit” and that the exchange has been sufficiently warned that its crypto offerings could be classified as securities.
The move builds on the SEC's argument that federal securities laws apply to digital assets offered as investments, a position that has fueled several regulatory conflicts with crypto companies.
In order to preserve the proper scope of discovery, the court must reject these defenses; It would limit summary judgment, save judicial and party resources, and prevent Kraken from trying to litigate the same issues over and over again at every possible stage of this case.
Kraken's attorney, Michael O'Connor, didn't shy away from criticizing the timing and intent of the SEC's move, calling it an “election day gambit” in a statement on X on Wednesday.
O'Connor cited the Ripple case, where a similar SEC motion was denied, to express confidence that Kraken's defenses would withstand scrutiny.
The movement also follows the Kraken's wishes Trial of the jury. And the SEC's challenge to the classification of 11 cryptos—including Solana (SOL), Cardano (ADA), and Polygon (MATIC)—as securities.
Kraken's repeated attempts to register with the SEC have been “set in stone” by the agency, according to SEC Chairman Gary Gensler, who has consistently applied securities laws to harm the crypto industry.
The SEC request comes amid speculation that Chairman Gary Gensler may soon step down. Assuming Donald Trump wins the election, analysts say Gensler could step down by the end of the year, following the precedent that the SEC chair left office during the administration's transition.
Edited by Sebastian Sinclair.
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