Kraken has requested a jury trial in response to a lawsuit filed by the U.S. Securities and Exchange Commission (SEC), according to a court filing dated September 12.
The move comes after a federal judge denied Kraken 's motion to dismiss the lawsuit, which involved allegations that the platform operated an unregistered securities exchange.
Kraken 's Protection
In the filed document, Kraken denied any illegal activity and criticized the SEC’s approach to the cryptocurrency industry.
The exchange also highlighted its efforts to engage with regulators, but was met with strong resistance. The platform stated:
“Kraken has attempted to work with the SEC to make the registration possible. But the industry’s efforts have been blocked at every step, with the SEC instead choosing a strategy of fighting with its sister regulators for enforcement powers that its chairman has admittedly not possessed.”
Additionally, Kraken claims that it did not know which digital assets the SEC considered “investment contracts” until the lawsuit was filed. The regulator has labeled the following digital assets traded on the crypto platform as securities: ADA, ALGO, ATOM, FIL, FLOW, ICP, MANA, Matic, NEAR, OMG, and SOL .
Kraken also challenged the SEC’s definition of “ Cryptoasset security,” arguing that courts have rejected it. They stated:
“The SEC has not identified any transactions in which investment contracts were allegedly entered into on Kraken. Digital assets cannot themselves be investment contracts because they do not carry the rights and obligations of a stock, a bond, or any other financial asset that Congress has said is subject to SEC regulation.”
Therefore, Kraken asserts that they are not involved in any illegal activities.
Challenging the SEC's authority
Kraken also questioned the SEC’s authority to regulate its business under certain provisions of the Securities Exchange Act. The platform argued that digital assets do not qualify as securities or investment contracts, and therefore trading them on Kraken does not violate the Exchange Act.
Additionally, Kraken claims that the SEC failed to provide adequate notice that its actions were unlawful, violating the exchange’s due process rights.
Their legal team argued:
“Because of the lack of clarity and fair notice of Kraken ’s obligations under the law, coupled with the lack of clarity and fair notice of Plaintiff’s understanding of the law, Kraken did not receive fair notice that its conduct was prohibited.”
