Cryptocurrency exchange Kraken is pushing back against the claims of the US Securities and Exchange Commission (SEC).
In November, the SEC charged Kraken with operating a virtual currency trading platform as an unregistered securities exchange, broker, dealer, and clearinghouse.
Earlier this year, Kraken filed a motion in U.S. District Court to dismiss these charges, and the company filed additional arguments Thursday in support of that motion.
Lawyers for the exchange argue that the SEC's argument expands the definition of an investment contract and expands the regulator's jurisdiction beyond its delegated responsibilities.
“When pressed to identify the securities in question, the SEC points to those that Kraken cannot trade, broker, or settle. Instead of specifying investment contracts, the SEC has asked courts to recognize that an “investment concept” alone is sufficient. I'm looking for it. Instead of identifying companies, the SEC is asking courts to embrace “ecosystems.” However, Kraken does not trade, mediate, or resolve “concepts” or “ecosystems.”
The SEC has never explicitly asserted that what is actually traded, brokered, or settled on Kraken is itself an investment contract. This failure highlights a fundamental issue in the SEC's case. Only digital assets are allegedly being traded, brokered and settled on Kraken, and this is not an investment contract. ”
The SEC alleged that Kraken bought and sold 11 types of “crypto-asset securities” on its platform and was required by law to register with regulators.
“The Supreme Court's decision in SEC v. W.J. Howey Co. forces the opposite conclusion. The Howey Court held that an “investment contract'' under the Securities and Exchange Act is “a contract in which an individual invests his or her funds in the public domain.'' “A contract, transaction, or scheme that invests in a business and expects to derive a profit solely from the promoters' or promoters' efforts.'' third party. '”
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