Will Kraken’s Jury Trial Request Tilt SEC Crypto Crackdown?

Kraken has officially requested a jury trial in its ongoing legal battle against the U.S. Securities and Exchange Commission (SEC). The request was made after a U.S. district court in California ruled that the lawsuit, which alleges the exchange operated as an unregistered securities exchange, broker, and clearing agent, would proceed to trial. This decision mirrors outcomes in similar cases against other major crypto exchanges such as Binance and Coinbase.

Kraken Requests Jury Trial in SEC Litigation

In a recent court filing, Kraken formally demanded a jury trial to contest the allegations brought forward by the US SEC. The exchange has denied all claims of illegal conduct, asserting that it has not engaged in activities that would classify it as a securities exchange, broker, or clearing agent under existing federal laws. 

This request for a jury trial comes after the court denied Kraken’s motion to dismiss the lawsuit in August. The firm aims to present its case before a panel of peers, seeking a fair evaluation of its defenses.

More so, this decision highlights the broader tension between cryptocurrency platforms and regulatory bodies.

Kraken’s Defense Arguments Against SEC

Kraken has presented several defenses in response to the U.S. Securities and Exchange Commission lawsuit. The company emphasizes that the digital assets listed on its platform do not qualify as securities.

Furthermore, the exchange maintains that it was not required to register with the US SEC. It argues that it does not meet the definitions of a broker or clearinghouse as outlined in the Securities Act and the Exchange Act.

The crypto platform also contends that the U.S. Securities and Exchange Commission lacks the authority to regulate its operations. It asserts that the digital assets themselves do not carry the obligations typical to traditional financial securities.

Additionally, the firm has accused the SEC of acting without due process and fair notice, suggesting that the regulatory actions were taken in violation of the First Amendment. The exchange maintains that the terms used by the SEC, such as “crypto asset securities” are ambiguous and lack clear definitions, making it difficult to comply with crypto regulations effectively.

Industry Reactions and Regulatory Clarifications

The SEC has faced criticism from various crypto firms for using vague terminology to justify its securities violation charges. Though not a direct response to Kraken’s filing, the regulatory body clarified its stance in its amended complaint against Binance, stating that “crypto asset securities” do not refer to the crypto assets themselves. 

This clarification was met with skepticism by industry leaders, including Ripple’s chief legal officer Stuart Alderoty. Stuart criticized the U.S. Securities and Exchange Commission for creating confusion with inconsistent terminology.

However, the SEC continues to pursue its enforcement strategy, asserting that these tokens are sold as investment contracts in secondary markets. Coinbase’s chief legal officer, Paul Grewal, highlighted the SEC’s ongoing challenges in defining and regulating digital assets. He indicated that the crackdown on major exchanges is likely to persist.

Kraken continues to face legal hurdles beyond the United States. Recently, Australia’s Federal Court ruled that the firm’s fiat margin extensions are regulated, but its crypto margin extensions are not.

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Ronny Mugendi

Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. His work includes notable contributions to Cryptopolitan and Coingape News Media, where he shares his insights on the latest developments in the cryptocurrency market. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.