Kraken and US SEC File Joint Proposed Order, What’s Happening?

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As a seasoned analyst with over two decades of experience in the financial industry, I find this latest development between Kraken and the SEC intriguing. The joint stipulation and proposed order indicate a potential shift in the regulatory landscape for digital assets, especially Bitcoin and Ether.

Kraken, a prominent cryptocurrency exchange, and the U.S. Securities and Exchange Commission (SEC) have agreed on a joint submission for a proposed court order. This action is taken as Kraken intends to challenge a previous ruling that favored the SEC in its regulatory role.

Decoding US SEC and Kraken’s New Proposed Order

As a researcher, I’m sharing an update: The U.S. Securities and Exchange Commission (SEC), acting as the plaintiff, and defendants Payward Inc and Payward Ventures (collectively known as crypto exchange Kraken) have agreed upon a stipulation, as detailed in a court filing dated December 23rd.

In a mutual filing, parties involved in the exchange have submitted a joint statement addressing disagreements over document discovery. Specifically, this dispute revolves around three main categories of documents requested by Kraken related to Bitcoin, Ether, public statements and testimony made by the SEC regarding digital assets, as well as internal trading policies concerning digital assets held by the SEC.

In November, the court delegated any disputes related to discovery and further discovery in this case to Magistrate Judge Robert M. Illman. Later, Magistrate Judge Illman declined Kraken Exchange’s petition for compelling the release of those discovery materials. Nevertheless, as an analyst, I find it noteworthy that the Kraken exchange considers these documents pertinent to our ongoing case.

According to Federal Rule of Civil Procedure 72(a), you have until December 30 to object to the court order. However, the cryptocurrency exchange plans to re-submit a revised request for production, tailored to fit the requirements of the order.

Kraken plans to fulfill only specific production requests as instructed by the Order. The parties will discuss these focused requests together.

In simpler terms, the U.S. Securities and Exchange Commission (SEC) and Kraken have decided to postpone their response deadlines for any objections to a specific order until March 31, 2025. They are considering requesting an even later date for further discussions.

Lawyer Who Defended Ripple CEO Seeks Win for Exchange

Matthew C. Solomon, a partner at the law firm Clearly Gottlieb, submitted an affirmation to safeguard Kraken, as the evidence for the documents was pivotal. He is renowned for handling numerous high-profile cases, such as winning the dismissal with prejudice for Ripple CEO Brad Garlinghouse and successfully defending all other claims on summary judgment in previous cases.

Kraken has asked a court order to force the Securities and Exchange Commission (SEC) to reveal documents explaining why Bitcoin and Ether were not included in the SEC’s lawsuit, even though they are traded in a similar manner to 11 other cryptocurrencies on their platform. However, the presiding judge found this key argument “not convincing”.

According to a report by CoinGape, various players within the crypto exchange market and industry are asserting that a previous speech given by former SEC official William Hinman holds significance regarding the classification of Bitcoin and Ether under U.S. securities laws. Furthermore, Kraken is making legal arguments based on the fair notice defense and the major questions doctrine in relation to the ongoing lawsuit with the SEC.

Significantly, Ripple’s General Counsel, Stuart Alderoty, has advocated for the removal of Hinman’s influence within the Securities and Exchange Commission (SEC), aiming to rebuild trust in the agency and ultimately resolve the ongoing legal dispute between Ripple and the SEC.

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2024-12-24 18:42