Security

In their motion to dismiss, Kraken’s lawyers disputed the legal theory that the exchange was an “ecosystem” for crypto asset securities.

Lawyers representing Kraken and the United States Securities and Exchange Commission (SEC) presented competing arguments to a federal judge over whether digital assets on the exchange may be considered securities.

In a June 20 hearing in the U.S. District Court for the Northern District of California, Payward — the firm doing business as Kraken — lawyer Matthew Solomon and SEC counsel Peter Moores met before Judge William Orrick to address a motion to dismiss filed by the exchange in February. The judge suggested he was “inclined to deny” the motion to dismiss, saying it was “plausible” digital assets were offered and sold as investment contracts on the crypto exchange.

In arguments before the judge, Solomon argued that there were significant differences in litigated cases between the SEC and Terraform Labs and Telegram. He also cited Judge Analisa Torres’ decision in the SEC’s case against Ripple Labs — in which the judge ruled the XRP token was a security when sold to institutional investors — but suggested the closest comparable case to Kraken’s was Coinbase’s.

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