As a seasoned researcher with a keen interest in the dynamic world of digital assets and blockchain technology, I find the recent ruling by Judge William Orrick against Kraken’s appeal to be an interesting development. My professional journey has led me through various legal landscapes, and I have witnessed firsthand the evolving nature of regulations surrounding cryptocurrencies.
A California federal judge has knocked back crypto exchange Kraken’s bid to appeal his decision to allow a Securities and Exchange Commission lawsuit to proceed as it “would only delay resolution.”
Judge William Orrick wrote in a Nov. 18 order dismissing Kraken’s motion for interlocutory appeal that he found the SEC had “adequately alleged” that crypto traded and sold on Kraken were investment contracts under the Howey test and subject to securities laws.
In simpler terms, he stated that obtaining a certification won’t significantly help resolve the ongoing lawsuit. Although the Securities and Exchange Commission (SEC) has presented a valid argument for securities violations against Kraken, it is only through the process of discovery that we can determine if Kraken’s sales, trades, and exchanges truly comply with all the necessary elements as defined in the Howey case.
In September, Kraken requested Judge Orrick’s approval to bring an appeal against the dismissal of their motion to dismiss in August. They argued that there is a significant disagreement regarding securities laws, which a higher court might be able to clarify—potentially resolving the case prematurely.
Discusses the possibility that an investment agreement lacking a formal contract or post-transaction duties might breach regulations, and queries whether the Howey Test necessitates an investment in a business endeavor.
However, Judge Orrick expressed a different viewpoint, stating that there has been no precedent case since Howey in which a court determined that contractual formalities or post-purchase responsibilities were essential to establish an investment contract.
“Several courts have addressed these issues and disagreed with Kraken’s position,” he added.
Following a request made by the SEC earlier this month to discard three of Kraken’s defenses, they contended that current laws clearly define investment contracts and provided sufficient prior warning for the exchange. In simpler terms, the SEC asked the court to dismiss certain defense points made by Kraken since existing regulations make it clear what constitutes an investment contract and gave Kraken adequate notice beforehand.
The ruling suggested that Judge Orrick should discard the defendants’ arguments, since Kraken had indicated they intended to seek “discovery considered irrelevant and potentially burdensome, under the pretext that this discovery might be connected in some way to their claims of due process violations.
In November 2023, the SEC filed a lawsuit against Kraken, accusing them of not registering as a trading platform, brokerage firm, dealership, or clearing house.
Counsel for Kraken did not immediately respond to a request for comment outside of business hours.
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2024-11-19 08:39