As a seasoned researcher and follower of the crypto space, I find the recent court ruling in Kraken’s case against the SEC particularly intriguing. Having delved into numerous legal battles within this dynamic industry, I can’t help but see parallels between the Kraken case and others like Ripple’s.
Stuart Alderoty, Ripple‘s Chief Legal Officer, recently used Twitter to point out a recent loss for the SEC in their lawsuit against Kraken. In his tweet, he stated, “In the Kraken case, another court has agreed that there is no such thing as a security within the context of crypto assets. This is unfortunate news for the SEC, whose strategy for regulation relies heavily on the assumption that this premise holds true, which now appears to be flawed.”
In reference to the Kraken case, another court has validated the non-existence of “cryptocurrency security assets.” This is unfavorable for the Securities and Exchange Commission (SEC), as their regulatory approach based on enforcement relies heavily on this flawed assumption.
— Stuart Alderoty (@s_alderoty) August 24, 2024
As per the statement made by Kraken’s Chief Legal Officer, Marco Santori, the SEC has been definitively refuted in their “tokens are securities” argument and will no longer be allowed to use it. This ruling significantly weakens the SEC in their efforts to categorize tokens as securities.
Kraken’s top legal executive celebrated the verdict as an affirmation that no tokens traded on Kraken qualify as securities.
In the Kraken case, the court’s ruling followed a pattern seen in the Ripple case: Although the token itself isn’t defined as a security, arrangements or agreements related to the token might be classified as one. This subtle interpretation was behind the court allowing the case to progress to the discovery phase, even though it dismissed the SEC’s broader arguments.
Kraken CLO hails ruling as significant win for Kraken
Although the court permitted the SEC’s lawsuit against Kraken to move forward, Kraken’s Chief Legal Officer, Marco Santori, celebrated the decision, as it dismissed the SEC’s wider arguments about tokens being classified as “crypto asset securities.” He considered this outcome to be a substantial victory.
As a researcher, I’ve observed that the court has critiqued the Securities and Exchange Commission (SEC) for its ambiguous and confusing definition of the crypto asset security concept. Santori pointed out that the court specifically challenged the SEC’s use of straw man arguments and misrepresentation of Kraken’s stance, which they claimed necessitates a “written contract” to classify a crypto asset as a security.
Despite Kraken’s challenge, a judge decided that the SEC’s lawsuit against Kraken for allegedly operating an unregistered securities exchange must proceed. In his decision, U.S. District Judge William H. Orrick noted that the SEC has presented a convincing case suggesting that some of the cryptocurrency transactions on Kraken’s network might be investment contracts and thus classified as securities under securities laws.
Kraken had requested the judge to dismiss the case filed by the SEC in November.
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2024-08-24 17:28