Highlights:
- The judge confirmed the SEC’s authority in the Kraken case and rejected the “major questions” argument.
- Kraken expands globally despite SEC lawsuits, plans EU entry, IPO, and partnerships.
- SEC pushes crypto regulation while lawsuits target Kraken, Coinbase, and Binance for compliance.
The California judicial system denied Kraken’s attempt to dispute SEC regulatory power through its “major questions doctrine” challenge. The decree from Judge William Orrick on January 24 confirmed the maintenance of SEC oversight authority. This is as long as it remains consistent with Congressional limitations. The judicial ruling determined cryptocurrencies hold less financial value than producing energy and issuing student loans.
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🚨 The SEC scores a win against Kraken! A California judge rejects Kraken's argument that Congress didn’t grant the SEC authority over crypto. Big moment in the crypto-regulation battle. ⚖️ #CryptoNews #SEC pic.twitter.com/ABEV5nEFo9
— The Coin Republic (@TCR_news_) January 27, 2025
The U.S. Securities and Exchange Commission prosecuted Kraken for functioning as an unregistered securities market. During the court hearing, Kraken demonstrated that Congress had not clearly defined its oversight role regarding cryptocurrencies. Judge Orrick confirmed during his previous court ruling that the SEC held sufficient legal authority to start litigation.
Kraken Claims Lack of Clear SEC Guidance
The court acknowledged Kraken’s fair notice argument yet declined to eliminate all pending charges. According to Kraken, the SEC failed to provide adequate notice about security rule violations. The exchange proposed that the Howey Test did not provide sufficient clarity regarding handling its secondary market transaction platform.
The SEC investigation failed to provide proof of Kraken’s awareness of its unlawful operational activities. This judicial defense plays a fundamental role throughout the ongoing case proceedings. The court ruling will establish foundational principles for SEC cryptocurrency transaction regulations.
SEC Targets Multiple Crypto Exchanges in Enforcement Push
The legal proceedings against Kraken represent the SEC’s ongoing enforcement actions against cryptocurrency companies. The SEC has focused its regulatory actions on multiple prominent exchanges like Coinbase and Binance. Kraken faces allegations that it has maintained an unregistered securities exchange since 2018.
SEC continues efforts to create more transparent regulations despite recent moves to delay enforcement of regulations The agency under Commissioner Hester Peirce developed a task force to create guidelines for digital assets. This initiative seeks to create specific boundaries for the crypto marketplace by defining its guidelines for regulatory compliance.
Kraken Expands Services Despite Legal Challenges
The company focuses on business expansion despite active legal action against its operations. The exchange launched kBTC-wrapped bitcoin tokens on both Ethereum and OP Mainnet. The company has also formed a strategic partnership with UK football club Tottenham Hotspur to serve exclusively as its Web3 and crypto partner.
The exchange has broadened its institutional custody services to now serve the UK and Australian markets. Kraken Exchange aims to initiate market entry into the EU, Switzerland, and other regulatory areas within the coming months. Kraken continues to expand globally while eyeing a possible initial public offering (IPO).
Additionally, a donation from Kraken to Ross Ulbricht gained national attention when the exchange sent $111,111 in Bitcoin to support the Silk Road founder upon his prison release.
🚨 TODAY: Kraken sent $111,111 worth of $BTC to Ross Ulbricht as a donation to help the Silk Road founder land on his feet. pic.twitter.com/YtJCoV6i0P
— Cointelegraph (@Cointelegraph) January 23, 2025
The SEC has launched multiple prominent legal actions against crypto exchanges. These lawsuits help shape the discussion about digital asset regulatory frameworks that continue to evolve deeply. These court battles will establish important jurisdictional principles that could determine the future direction of the crypto regulatory framework.
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