Kraken Faces SEC Lawsuit Over Unregistered Exchange

A judge has ruled that cryptocurrency platform Kraken must face a lawsuit from the US Securities and Exchange Commission (SEC) for allegedly operating an unregistered securities exchange. The SEC claims that some of the cryptocurrency transactions facilitated by Kraken qualify as investment contracts and thus fall under securities laws.

US District Judge William H. Orrick stated that the SEC has made a plausible case regarding Kraken’s activities. Both Kraken and the SEC have yet to comment on the ruling. Kraken had previously sought to have the case dismissed, which was filed by the SEC in November.

The classification of digital tokens as securities remains a contentious issue in the courts. A Manhattan judge ruled that Ripple Labs’ XRP token sales were not under SEC jurisdiction when sold on exchanges, while other judges have ruled differently in cases involving Terraform Labs and Coinbase.

During a June hearing, Kraken’s lawyer argued against applying the rulings from the Terraform and Coinbase cases to Kraken’s situation.

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