Judge denies Kraken motion to dismiss SEC lawsuit

• US District Judge William H. Orrick has ruled that the US Securities and Exchange Commission has a plausible case against crypto exchange Kraken.
• According to the judge, the SEC’s lawsuit against Kraken will proceed.

The US Securities and Exchange Commission’s lawsuit against crypto exchange will proceed, a judge has ruled.

On Friday, August 23, 2024, US District Judge William Orrick denied Kraken’s motion to dismiss SEC’s lawsuit. In court documents filed on Friday, the judge noted that the regulator’s allegations that the crypto exchange had offered unregistered securities were plausible.

“Kraken does not deny it never registered with the agency, but says that it does not need to because the transactions it enables on its platform do not involve securities and do not fall within the SEC’s regulatory purview. But the SEC has plausibly alleged that at least some of the cryptocurrency  transactions that Kraken facilitates on its network constitute investment contracts, and therefore securities, and are accordingly subject to securities laws,” Judge Orrick wrote in the ruling.

Solana among alleged unregistered securities

In its lawsuit against Kraken, the SEC listed 11 cryptocurrencies it said were sold as investment contracts. These are Cardano (ADA), Algorand (ALGO), Cosmos Hub (ATOM), Filecoin (FIL), Flow (FLOW), and Internet Computer (ICP).

Others are Decentraland (MANA), Polygon (MATIC), Near (NEAR), OMG Network (OMG) and Solana (SOL).

The judge’s opinion, delivered as part of the ruling, is that “all the SEC must do is plausibly allege that at least one of these crypto assets is being traded as an investment contract to make its claims feasible.”

SEC has sued multiple crypto exchanges, including Binance and Coinbase. The regulator filed its lawsuit against Kraken in November 2023.