Kraken Challenges SEC in Court, and Reaffirms its Commitment to Follow Global Regulations

Kraken, one of the world’s leading cryptocurrency exchanges, has urged the US court to dismiss the claims brought against it by the US Securities and Exchange Commission (SEC). The exchange claims that the SEC’s allegations are unfounded and could lead to a reordering of the US financial regulatory structure, according to court filings.

The lawsuit filed by the SEC in November 2023 alleges that the Kraken exchange has been operating an unregistered securities trading platform.

In February 2024, Kraken moved to dismiss the SEC’s lawsuit, arguing that the cryptocurrencies listed as SEC-compliant should be treated like commodities instead of securities. Now Kraken’s lawyers are urging the US court to dismiss the claims.

Kraken’s Response

Kraken’s latest reply to the SEC is based on two key arguments:

The SEC has not provided clear regulatory guidelines on classifying digital assets as securities.
The SEC is exceeding its regulatory authority by applying securities laws to digital assets.

Kraken’s lawyers use the “Howey Test”, which is used to define an investment contract, as a basis for their dismissal. The lawyers claim that the SEC “cannot satisfy Howey’s additional requirements”.

The SEC filed an opposition to Kraken’s dismissal, claiming that the SEC’s enforcement action falls within its Congressional mandate.

Kraken’s Commitment to Global Compliance

Despite these challenges, Kraken remains committed to maintaining high standards of regulatory compliance worldwide.

Bloomberg recently reported that Kraken was “actively reviewing” Thether’s status after new EU rules, with the potential to delist USDT in Europe.

However, Kraken’s global head of asset growth and management, Mark Greenberg, tweeted, “[Kraken] continues to list USDT in Europe and we have no plans to delist at this time.” Greenberg also added, “We will of course follow all legal requirements, even those we disagree with. But the rules are not finalized yet and we continue to do everything we can to continue to offer all relevant stablecoins to our European customers.”

The new EU rules under Markets in Crypto Assets Regulation (MiCA) framework, which applies to stablecoins, will come into force on June 30. Six months later on December 30 cryptocurrency service provider rules will take effect.

As for US regulatory compliance, Kraken recently announced that it acquired TradeStation Crypto to expand its reach and regulatory licensing in the US.

“The transaction is part of our efforts to accelerate our US presence and will unlock further growth and new product opportunities for Kraken in the US,” a Kraken spokesperson said.

TradeStation Crypto has already acquired a money transmitter license and other regulatory licenses in most US states in the previous years. Its parent firm TradeStation announced its withdrawal from crypto with this move after it settled $3 million with the SEC over a lending service.

Currently, Kraken offers most of its services to US clients, including over 200 cryptocurrencies to trade on the spot. As far as restrictions go, there is:

No service to Washington State, New York, and Maine residents
No staking
No futures trading
Cannot use Opt-In Rewards, Rewards on Kraken.com, and Parachain auctions

Kraken Canada

Unlike US clients, Canadian clients can use crypto staking. Kraken also accepts CAD deposits and withdrawals and offers over 200 CAD pairs to trade. However, margin and futures trading is not available at the moment.

About Kraken

Kraken is one of the oldest and most respected cryptocurrency exchanges. Its top features include:

Safeguarding users’ digital assets, Kraken completed SOC 2, Type I auditor’s examination for custody and funding services.
24/7 support via live chat, voice, and email support in more than 13 languages.
Over 175 cryptocurrencies to trade including Bitcoin and Ethereum.
Advanced crypto trading with API and Kraken Pro.
Market-leading mobile apps for Android and iOS, including a self-custody crypto wallet app with support for eight blockchains.

For more information about Kraken and its services, please visit Kraken US.