Crypto exchange Kraken has requested a jury trial in response to a lawsuit brought against it by the U.S. Securities and Exchange Commission (SEC), according to a court filing on Thursday.
A California judge ruled last month that the SEC’s case against Kraken, alleging the exchange violated federal securities laws by failing to register as a broker, clearinghouse, or exchange, will proceed to trial. Similar rulings have been issued in SEC cases against other major crypto exchanges, including Binance and Coinbase.
The SEC filed its lawsuit against Kraken in November 2022 in the Northern District of California, seeking a permanent injunction to prevent further securities violations, as well as disgorgement of alleged “ill-gotten gains” and other civil penalties. The SEC identified 11 tokens—ADA, ALGO, ATOM, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG, and SOL—as unregistered securities.
In Thursday’s filing, Kraken denied any illegal conduct and presented 18 defenses in response to the SEC’s allegations. The exchange’s legal argument centers on its interpretation of the Securities Act and the Exchange Act, arguing that neither act includes digital assets under its provisions.
Kraken argues that it was never required to register with the SEC, as it does not operate as an exchange, broker-dealer, or clearing agent within the definitions set forth in the Exchange Act.
Kraken further claims that the SEC lacks the authority to regulate the exchange, stating, “The digital assets themselves cannot be the investment contracts because they carry none of the rights and obligations of a share of stock, a bond, or any other financial asset that Congress has said is subject to SEC regulation.”
The filing also acknowledged that Kraken offers services such as listing over 220 crypto assets, margin trading, an over-the-counter trading desk, instant buy features, and customer applications, but says that these activities do not classify the platform as a securities exchange, clearing agency, or broker-dealer.
Kraken accused the SEC of acting without due process and fair notice, arguing that the regulatory action infringes upon its First Amendment rights.
