Crypto exchange Kraken has replied to the United States Securities and Exchange Commission’s (SEC) accusations of unregistered securities trading. Kraken points out the SEC’s legal interpretation errors and inconsistencies and focuses on the agency’s contestation of its legal argument.
Kraken’s legal defense
Kraken is using the court to refute the SEC’s assertion that they do not comply with registration for the securities they trade. The exchange initially contends that the SEC’s misjudgment of investment contracts as traded on the platform is a sign that the SEC misses the essence of the case – the issue’s core. Moreover, Kraken, though the SEC uses the phrases “investment model” and “ecosystem” instead of “investment contract” and “enterprise” in this same context, further supports the notion that the SEC is misinterpreting the scope.
Kraken’s responsive action notes that the various claims made by the SEC are inconsistent with the actual statements and adds to the SEC’s omission to crisply specify the contracts for investments in question. The exchange challenges the SEC’s lack of knowledge and offers the example that it is wrong to name the transactions, which SEC has failed to capture correctly as the nature of the transactions.
Legal Misinterpretation
The Kraken contention is that the SEC misapplies basic legal notions like actionable receipt of securities. Kraken is alluding to the SEC’s vicious criteria. They put the issue in question, arguing that the requirement of a written contract for an investment agreement is wrong because oral, expressed, or implied contracts are valid (too). By setting the SEC’s view aside, Kraken will target the SEC’s claims in the lawsuit against it. Supporting Stance with Precedent
Kraken refers to the past, with the SEC and ICO cases suggesting its point of view. Moreover, a couple of the cases were about executing contracts, and the other was about Kraken’s main stance—investment contracts. Kraken attempts to strengthen its case and refute the SEC’s charges through quotations from past cases.