PANews reported on November 7 that according to CoinDesk, the U.S. Securities and Exchange Commission (SEC) asked the Northern District Court of California to dismiss three defenses raised by Kraken against its crypto exchange being accused of illegal operation. In a motion filed on November 5, the SEC explicitly opposed Kraken's two main points: one was the ambiguity of securities laws and their application to virtual assets, and the other was Kraken's claim that it had not received reasonable notice that its actions violated securities laws. In addition, the SEC also asked the court to dismiss Kraken's defense based on the "substantial doubt principle." This principle was established by the Supreme Court, which advocates that regulators should not arbitrarily expand their regulatory powers without explicit authorization from Congress.
The SEC filed a lawsuit against Kraken in November 2023, alleging that it operated as an unregistered securities exchange, broker, dealer, and clearing house. Kraken had attempted to apply to dismiss the case, but the request was rejected by the court in August. The SEC's latest motion stated: "In dismissing Kraken's motion to dismiss, the court previously rejected Kraken's argument in August that the leading issues doctrine precluded this action and also ruled that the definition of 'investment contract' in the Securities Exchange Act of 1934 is settled law."
According to the filing, Kraken “has currently filed multiple discovery requests seeking numerous documents and voluminous admissions of evidence related to these legally unsupportable defenses.” The SEC said: “The Court should dismiss these defenses to help maintain the proper scope of the investigation, narrow summary judgment, conserve judicial and litigant resources, and prevent Kraken from attempting to repeatedly revisit the same issues at every possible stage of this case.”
