Cryptocurrency exchange Kraken has formally requested a jury trial in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).
SEC Allegations and Kraken’s Response
Last November, the SEC accused Kraken of operating its cryptocurrency trading platform as an unregistered securities exchange, broker, dealer and clearing agency. Earlier this year, Kraken filed a motion in U.S. District Court to dismiss those charges, arguing that the SEC’s allegations would broaden the definition of investment contracts and exceed the regulator’s authority.
U.S. District Judge William H. Orrick denied Kraken’s request last month, stating that the SEC “has made a plausible case that certain cryptocurrency transactions facilitated by Kraken on its network are investment contracts and therefore securities.” Kraken filed a new document with the court on Thursday requesting a jury trial and responding to the SEC’s complaint.
“We have operated for more than a decade without receiving any indication from the regulator that we were violating securities laws.”
Evaluation of Digital Assets as Investment Contracts
Kraken noted that the SEC refused to disclose which crypto asset transactions it classified as investment contracts until last year.
“In fact, in 2021, the SEC Chairman told Congress, ‘These cryptocurrency exchanges do not have a regulatory framework at the SEC,’ and ‘The only authority that can really address this lack of framework is Congress.’”
“Digital assets themselves cannot be investment contracts because they do not carry the rights and obligations of stocks, bonds, or any other financial asset that Congress has said is subject to SEC regulation. Digital assets themselves are the only thing being bought, sold, brokered, or exchanged on Kraken.”
SEC Allegations of Securities
The SEC alleges that Kraken sold more than 11 “crypto asset securities” on its platform and was required by law to register with the regulator. Among those alleged securities is Cardano (ADA). $0.358054Algorand (ALGO), Cosmos 
$4 (ATOM) and Solana (SOL).
This legal battle between Kraken and the SEC highlights the uncertainty surrounding the regulation of cryptocurrencies and digital assets. Industry representatives argue that the lack of a clear regulatory framework is stifling innovation, while regulators are struggling to fulfill their duty to protect investors. This case could set a precedent for how cryptocurrency exchanges are classified and regulated, shaping future legal approaches.
Disclaimer: The information contained in this article does not contain investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
