3 weeks ago
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A Court in California ruled that none of the trading assets on the Krane crypto exchange are securities. This court ruling injected a huge level of confidence among all the American crypto exchanges which are providing crypto trading services.
SEC Vs Kraken
The main conflict between Kraken & the United States Securities and Exchange Commission (SEC) started Q4 2023.
On Nov 20, 2023, the SEC body filed a lawsuit against the Kraken crypto exchange, accusing it of operating as an unregistered securities exchange, broker-dealer, and clearing agency.
The SEC’s complaint argued that Kraken mishandled customer information, commingled customer assets with its own, and offered several crypto tokens as securities without proper registration. Among the tokens identified by the SEC as securities were Cardano’s ADA, Cosmos’s ATOM, Filecoin’s FIL, Solana’s SOL, and Near Network’s NEAR, along with six other tokens. This legal action set the stage for a significant battle over the classification and regulation of crypto assets in the United States.
Court ruling against SEC’s allegations
In the latest court ruling, Judge Orrick sided with Kraken in a significant case brought by the SEC body. The SEC had alleged that multiple tokens offered by Kraken exchange, including Cardano (ADA(, Cosmos (ATOM), Filecoin (FIL), Solana (SOL), and Near Network (NEAR), among others, were securities. Central to the SEC’s argument was the application of the Howey test, a standard derived from a 1946 U.S. Supreme Court case, which determines if an asset qualifies as an investment contract and thus a security.
Today, the Federal Court for the Northern District of California ruled, as matter of law, that none of the tokens trading on Kraken are securities.
This is a significant win for Kraken, for the principle of clarity and for crypto users everywhere. It also confirms Kraken’s…
Judge Orrick found that the SEC’s attempt to assert regulatory authority over these crypto tokens as securities was not justified. He asserted that, while cryptocurrency is a novel financial instrument, the SEC’s approach did not align with the principles established by the Howey test.
6/ The SEC unqualifiedly lost on this “tokens are securities” theory, and will not be permitted to rely on it going forward.
Instead, it will need to prove, for every alleged transaction on Kraken, that the Howey Test factors are satisfied.
They aren’t, and we look forward to…
The judge’s ruling favoured Kraken’s argument that the SEC was overreaching its congressionally-approved authority, marking a notable victory for the crypto industry.
Read also: Mark Cuban Backs Kamala Harris as Pro-Crypto Candidate, Sparks Opposition from Cardano Founder
English (US) · 