Kraken, a crypto exchange, filed to dismiss a November lawsuit from the United States Securities and Exchange Commission (SEC). The lawsuit is expected to set a “dangerous precedent” for the agency’s remit, stated Cointelegraph.
On February 22, 2024, Kraken filed a dismissal motion with a San Francisco federal court.“The SEC’s theory is that there can be an investment contract with no contract, no post-sale obligations and no interaction at all between the issuer and the purchaser,” Kraken explained.
Sources revealed that the theory “has no limiting principle” and would grant the SEC “boundless authority over commerce and potentially open up the floodgates to private securities law claims,” it argued. “It would turn a broad range of ordinary assets or commodities, like sports memorabilia, trading cards, expensive watches, or even diamonds, into securities,” the firm added.
It is expected that the SEC accused Kraken of deficient internal controls, which saw about $33 billion worth of customer assets commingled with business funds, concluded Cointelegraph.
(With insights from Cointelegraph)