Kraken Seeks Jury Trial in SEC Lawsuit, Presents Defense Arguments

As a seasoned analyst with years of experience in the crypto market, I find myself intrigued by Kraken’s audacious move to demand a jury trial against the SEC. This is reminiscent of David versus Goliath, albeit in a digital battlefield. The SEC has been relentless in its pursuit of compliance among exchanges, and Kraken, being one of the giants in the crypto space, finds itself under scrutiny.

According to recent court documents, crypto platform Kraken has opted for a jury trial in response to the lawsuit filed against it by the U.S. Securities and Exchange Commission (SEC).

Last month, a California court decided that the Securities and Exchange Commission’s lawsuit against Kraken can move forward to trial. This decision followed similar rulings in cases involving Binance and Coinbase (COIN), both of which are accused by the agency of breaking federal securities laws by failing to register as brokers, clearinghouses, or exchanges with the SEC.

On Thursday, Kraken restated their stance of not having partaken in any unlawful activities, addressing every accusation made in the SEC’s lawsuit and offering 18 additional arguments for their defense.

Kraken’s defense seemed to rely on its understanding that both the Securities Act and the Exchange Act do not explicitly cover digital assets. The platform argued it had never registered with the SEC because registration wasn’t necessary for them, and furthermore, it didn’t fit the definition of an exchange, a broker-dealer, or a clearing agent as defined by the Exchange Act.

The company contended that the Securities and Exchange Commission (SEC) didn’t provide a valid basis for legal action, as they lacked the power to oversee Kraken.

As a researcher delving into the realm of digital assets, I’ve come to understand that these assets, on their own, do not qualify as investment contracts. This is because they lack the inherent rights and responsibilities synonymous with traditional financial instruments such as stocks, bonds, or any other asset regulated by Congress under the purview of the Securities and Exchange Commission (SEC).

Kraken openly disclosed offering trading for over 220 cryptocurrencies around the world, along with margin trading, over-the-counter (OTC) trading, instant purchase options, and app-based services for customers. However, they emphasized that these features do not convert their platform into a securities exchange, clearing house, or brokerage firm.

In essence, Kraken claimed that the Securities and Exchange Commission (SEC) made decisions without giving proper notice and following established legal procedures, implying that actions were taken against them for simply exercising their First Amendment rights.