Krakens Battle Against SEC Intensifies Is the Dismissal Request in Peril

Federal Judge leans towards rejecting Kraken’s motion to dismiss SEC’s case, potentially leading to a lengthy discovery phase and significant legal expenses. The SEC argues that Kraken’s platform facilitated token sales as securities under the Howey test. During a recent court hearing, Judge Orrick expressed his inclination to deny Kraken’s motion, citing previous rulings in related cases. The denial of Kraken’s motion could have far-reaching implications for the classification and regulation of digital assets. The SEC contends that Kraken’s business model involves selling digital assets as securities, requiring regulatory oversight. Kraken’s defense team highlights differences between their case and others, such as those involving Terraform Labs and Telegram, and argues that their case is most comparable to Coinbase’s. While Judge Orrick has not issued a formal ruling, he suggests that the SEC’s argument is plausible and that Kraken’s motion to dismiss will likely be denied. If the motion is denied, the case will enter a discovery phase, which could take several years and incur significant legal expenses for Kraken. This legal battle between Kraken and the SEC began in November 2023 when the SEC sued Kraken’s parent companies. Kraken attempted to settle the lawsuit in February but was unsuccessful. The outcome of this case could have long-lasting implications for crypto regulations.