The legal battle between Kraken and the Securities and Exchange Commission (SEC) is drawing public attention due to its potential implications for the cryptocurrency industry.
Key Arguments of the Parties
Kraken cited the 'major questions doctrine' to support its claims, asserting that government agencies cannot exercise powers not explicitly delegated to them by Congress. Judge Orrick noted that the SEC was not claiming 'extremely consequential powers beyond what Congress could reasonably be understood to have granted it.' He emphasized that such cases could significantly impact the American economy.
SEC's Allegations Against Kraken
In November 2023, the SEC accused Kraken of offering unregistered securities and operating illegally as an exchange, broker, dealer, and clearing agency. The agency also claimed that Kraken mixed customer funds with its own assets.
Consequences of Legal Decisions
In February 2024, Kraken filed a motion to dismiss the SEC's lawsuit, arguing that its outcome could set a dangerous precedent for regulatory authority. In August, a U.S. federal court denied Kraken's motion to dismiss the SEC's claims.
The proceedings between Kraken and the SEC intensify the uncertainty in cryptocurrency regulation, and their outcome could significantly impact the entire sector.
