Judge Denies Kraken Motion to Dismiss SEC Lawsuit, Case to Proceed

A US District Judge ruled that the SEC lawsuit against Kraken will proceed, denying the crypto exchange motion to dismiss. The SEC alleges Kraken offered unregistered securities, including Solana and Cardano, as investment contracts.

On August 23, 2024, US District Judge William H. Orrick ruled that the US Securities and Exchange Commission’s (SEC) lawsuit against the cryptocurrency exchange Kraken will move forward, denying Kraken’s motion to dismiss the case.

The lawsuit, originally filed in November 2023, accuses Kraken of offering unregistered securities on its platform. The SEC identified 11 cryptocurrencies in its complaint, including Solana (SOL), Cardano (ADA), and Algorand (ALGO), which it claims were sold as investment contracts and thus fall under securities regulations.

In the court documents filed on Friday, Judge Orrick stated that the SEC’s allegations were “plausible,” noting that Kraken had not registered with the agency, as it argued that its transactions did not involve securities and were beyond the SEC’s regulatory scope. However, the judge determined that the SEC had sufficiently alleged that some of the crypto transactions facilitated by Kraken might indeed constitute investment contracts and thus be subject to securities laws.

This ruling comes amid a broader crackdown by the SEC on cryptocurrency exchanges, with similar lawsuits filed against major players like Binance and Coinbase. The SEC’s actions reflect its ongoing efforts to regulate the crypto industry and ensure compliance with US securities laws.

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