Kraken Speaks Out on SEC Lawsuit and the Fight for Crypto Autonomy

Kraken has responded to a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) by sharing insights on what it terms “the real story” behind the SEC’s legal action. After filing a motion to get the case dismissed last week, Kraken has issued a statement highlighting the importance of free speech and innovation in the realm of cryptocurrency within the United States.

In a blog post titled “The real story of the SEC’s suit against Kraken, and why Kraken is moving to dismiss the case,” the crypto exchange outlined the sequence of events leading up to the SEC’s lawsuit. Kraken emphasized the timing of the lawsuit, which followed shortly after its testimony before the House Financial Services Committee and the House Agriculture Committee on May 10. During this testimony, Kraken’s chief legal officer, Marco Santori, criticized the SEC’s approach to crypto regulation, stating, “Crypto innovators in the United States should not have to fear retaliation for their political speech. They should be free to earnestly advocate for better law and more efficient markets.”

Kraken’s contention with the SEC lawsuit is profound, particularly criticizing the SEC for what Kraken perceives as an attempt to intimidate and silence those advocating for a clearer regulatory framework for cryptocurrencies. The exchange argues that the SEC’s lawsuit lacks a concrete basis, particularly highlighting that the SEC did not identify any specific securities traded illegally on the platform.

“Instead of identifying securities, the complaint asks the court to endorse a theory that there can be an investment contract without any contract, without any post-sale obligations or even any interaction at all between the issuer and the purchaser,” Kraken stated. The exchange fears that agreeing with the SEC’s argument would grant the regulatory body excessive control over a wide array of commerce, not limited to the crypto industry.

Kraken further asserts, “The court should not endorse this theory because it has no limiting principle. It would give the SEC boundless authority over commerce — from collectibles, such as sports memorabilia, trading cards, expensive watches, to commodities like diamonds.”

The exchange concluded its statement with a caution about the broader implications of the SEC’s aggressive regulatory approach, suggesting that “The U.S. risks losing its standing as a world leader in innovation if it continues allowing its regulatory agencies to assert statutory authority without explicit permission from Congress.”