A California judge has denied Kraken's appeal in its case with the SEC, which accuses the exchange of unregistered securities trading.
Case Background
The SEC filed a lawsuit against Kraken in November 2023, accusing the exchange of failing to register as a broker, dealer, and clearing agency. The SEC considers cryptocurrencies traded on Kraken to be securities under the Howey Test. Kraken denied the allegations and sought an appeal, which the court denied.
Legal Issues
Judge Orrick dismissed Kraken's argument regarding the application of the Howey Test, stating no legal precedent supports it. Ongoing discovery is necessary to establish whether Kraken's operations meet all Howey Test requirements. The SEC has also moved to dismiss several defenses from Kraken to avoid unnecessary discovery efforts.
Kraken's Future
Despite the legal setback, Kraken plans to launch its blockchain 'Ink' in early 2025. The case remains pivotal in the discussion of cryptocurrency regulation in the U.S.
The court's ruling against Kraken is a significant step in cryptocurrency regulation and could impact the future strategies of crypto exchanges in the U.S.
