Controversy Arises from SEC’s Lawsuit Against Kraken as Multiple State Officials Accuse SEC of Severe Overreach
State Attorneys General express concern that the SEC’s lawsuit against Kraken may harm consumers and believe that the SEC is expanding the definition of “investment contract” to automatically classify cryptocurrencies as securities.
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Joint Accusations by State Attorneys General against SEC’s Lawsuit on Kraken
SEC Stripping States of Jurisdiction
Joint Accusations by State Attorneys General against SEC’s Lawsuit on Kraken
According to CoinDesk, US state officials, including industry lobbyists and law enforcement officials from Texas, Montana, Arkansas, Iowa, Ohio, South Dakota, Mississippi, and Nebraska, have jointly submitted a friend-of-the-court brief in the SEC’s lawsuit against Kraken. Cryptocurrency industry lobbyists from organizations such as the Digital Chamber of Commerce, the Blockchain Association, and the DeFi Education Fund are also included.
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State Attorneys General express concern that the SEC’s lawsuit may harm consumers and believe that the SEC is expanding the definition of “investment contract” to automatically classify cryptocurrencies as securities.
SEC Stripping States of Jurisdiction
The brief emphasizes that the states’ filings are not in support of Kraken but rather against the SEC. It states that the states strongly oppose the SEC’s attempt to categorize cryptocurrencies as securities. The exercise of unauthorized power by the SEC would expose consumers to risks, as it could prioritize future similar cases under federal law, which may not be as suitable as state laws in addressing specific risks associated with non-securities products. State laws are better equipped to protect consumer rights than federal securities laws.
The brief highlights that past state cases have contributed to clarifying the definition of investment contracts.
In addition to accusing Kraken of offering 11 unregistered securities, the SEC also accuses Kraken of commingling user and company funds.
Last week, Kraken filed a motion to dismiss, claiming that the SEC has failed to reasonably allege its arguments and has overstepped its authority, similar to the arguments previously presented by Coinbase and Binance.
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Kraken Faces SEC Accusations Again: Commingling Users, Exchanges Billions of Dollars, Offering Numerous Unregistered Securities
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Kraken
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