Legal Representative Notes Differences in Kraken and Ripple Cases

Legal analyst Bill Morgan has weighed in on the ongoing legal battle between cryptocurrency exchange Kraken and the U.S. Securities and Exchange Commission (SEC), reiterating a critical distinction.

Analyst Comments on Differences

Kraken attempted to lean on a recent court decision involving Ripple Labs to defend itself against SEC allegations. However, Judge William Orrick found this argument to be “readily distinguishable” from the facts at hand. Reiterating the difference, Morgan remarked:

Kraken vs. SEC Case

Kraken cited Judge Analisa Torres’ ruling in the Ripple Labs case, in which it was determined that the programmatic sales of XRP did not satisfy the third prong of the Howey test. To clarify, the Howey test is used to determine whether a transaction qualifies as an investment contract. They argued that if the sale of XRP didn't meet the criteria, their activities should also be justified. However, Judge Orrick had a different view.

Judge's Decision

Judge Orrick clarified that the decision in the Ripple case was highly specific to its facts and did not automatically apply to other digital asset cases. In this context, Kraken failed to use this decision to its advantage.

Thus, the legal battle between Kraken and the SEC continues to develop, with each side presenting its arguments. As Morgan noted, each case has its unique features that can significantly affect its outcome.