“On January 24, California federal judge William Orrick rejected one of the defenses of bitcoin exchange Kraken in its case against the SEC. The trading platform invoked the fundamental issues doctrine to argue that Congress did not grant the regulator authority over cryptocurrencies. This decision of the US Supreme Court was previously used by many companies in the case against the Commission. In his ruling, Judge Orrick said the SEC does not claim “overwhelming powers beyond those […]”, — write: businessua.com.ua
On January 24, California federal judge William Orrick rejected one of the defense arguments of bitcoin exchange Kraken in a case against SEC.
The trading platform referred to the doctrine key issues to prove that Congress has not given the regulator authority over cryptocurrencies. This decision of the US Supreme Court was previously used by many companies in the case against the Commission.
In his ruling, Judge Orrick said the SEC does not claim “overwhelming powers beyond those which Congress could reasonably grant it.” According to him, cases involving the doctrine of fundamental questions “can have a huge impact on the American economy.”
“Cryptocurrency is a growing financial instrument, but it has not reached a level of economic import comparable to the US energy market or the billions of dollars in outstanding student loan debt,” he added.
At the same time, the judge recognized the legitimacy of Kraken’s defense arguments for not receiving “fair notice” from the regulator about the violation of the law.
“The SEC would have to prove that any ordinary entity in Kraken’s shoes would understand that, under the Howie test, stock exchange transactions in the secondary market are investment contracts,” he said.
As a reminder, in November 2023, the Commission accused Kraken of offering unregistered securities in the form of digital tokens on its platform.
The agency also said that the company was engaged in illegal activities as an exchange, broker, dealer and clearing agency. Other claims related to improper business practices, such as the commingling of client and corporate funds.
In February 2024, Kraken filed a motion to dismiss the SEC’s lawsuit, saying it would set a “dangerous precedent” for the regulator’s powers. In August, the US Federal Court refused the exchange to satisfy the requirements.
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