Looking at Kraken’s Motion to Dismiss an SEC Lawsuit

Crypto
exchange
Kraken
filed
a
motion
to
dismiss
the
lawsuit
it
faces
by
the
U.S.
Securities
and
Exchange
Commission.

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The
U.S.
Securities
and
Exchange
Commission
didn’t
allege
actual
fraud
or
harms
to
Kraken’s
consumers,

the
exchange
argued
in
a
motion
to
dismiss
the
lawsuit
it
faces.

This
is
one
of
several
lawsuits
the
industry
is
tracking,
including
those
against
Coinbase
and

Binance.US,
plus
a
new
entrant
hoping
to
secure
a
favorable
ruling
in
a
specific
district.
These
suits
all
share
one
premise:
How,
exactly,
might
the
SEC
oversee
the
crypto
industry
and
are
its
current
actions
appropriate?

Some
part
of
the
Kraken
motion
to
dismiss
treads
what
at
this
point
is
very
familiar
ground:
That
the
SEC
hasn’t
really
made
its
case
that
any
of
the
assets
it
named
are
securities,
that
it’s
stretching
the
definition
of
an
“investment
contract,
and
that
it’s
overstepping
its
boundary.

Other
parts
are
a
little
more
unique:
Kraken
referenced
the
SEC’s
arguments
that
the
exchange
actively
marketed
the
digital
assets
it
named,
but
didn’t
delve
too
deeply
into
that.
And
the
exchange
said
the
SEC
hadn’t
alleged
any
direct
consumer
harm,
but
didn’t
explicitly
address
the
SEC’s
commingling
allegations.

Still,
Kraken
employed
similar
arguments
to
the
ones
made
by
Coinbase
and

Binance.US
in
their
own
motions
to
dismiss.
We
haven’t
gotten
many
definitive
rulings
on
this
argument,
and
we
won’t
for
a
while.
But
one
thing
is
clear:
There’s
a
very
good
chance
that
the
Supreme
Court
of
the
United
States
might
end
up
involved
at
some
point.

The
Coinbase
case
is
in
the
Southern
District
of
New
York,

Binance.US
is
in
the
District
of
Washington
and
Kraken
is
in
the
Northern
District
of
California.
Another
company,
going
by
the
name

Legit.Exchange,
just
filed
suit
against
the
SEC
in
the
Northern
District
of
Texas.
The
chances
of
four
different
district
judges
in
four
different
districts
finding
a
consensus
is
a
bit
slim.
Assuming
the
parties
involved
appeal
whatever
rulings
come
out,
we’re
also
looking
at
a
few
appeals
courts
that
will
weigh
in.

While
it’s
obviously
way
too
early
to
try
and
predict
where
these
cases
will
go,
it
seems
likely
at
this
stage
that
–
given
the
resources
of
the
parties
involved
–
at
least
one
of
these
cases
will
probably
keep
getting
appealed
until
that
route
is
exhausted.

My
question
for
the
legally
versed
readers
of
this
newsletter:
What
might
that
look
like?
What
sort
of
timeline
are
we
looking
at,
and
what
all
might
happen
before
SCOTUS,
assuming
we
get
that
far?

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If
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got
thoughts
or
questions
on
what
I
should
discuss
next
week
or
any
other
feedback
you’d
like
to
share,
feel
free
to
email
me
at

nik@coindesk.com
or
find
me
on
Twitter

@nikhileshde.

You
can
also
join
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group
conversation
on

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See
ya’ll
next
week!