Oh, what a tangled web we weave when first we practice to deceive! Or, in this case, when a crypto exchange decides to tango with the SEC. ππΊ
On the 24th day of January, 2025, in the great state of California, a federal judge dealt a blow to Kraken, the crypto giant, in its ongoing legal saga against the mighty US Securities and Exchange Commission (SEC). π―
When the ‘Major Questions’ Defense Goes Up in Smoke…
While Kraken’s “fair notice” and “due process” defenses were allowed to waltz on, its “major questions doctrine” defense was shown the door. π
You see, the SEC accused Kraken of playing fast and loose with unregistered securities through its exchange services. Kraken, being the resilient beast it is, countered with a whopping eighteen defenses. The SEC, however, wasn’t impressed and moved to dismiss a few, notably the “major questions doctrine.” ππ«
This defense was a bold claim by Kraken, suggesting that government agencies need explicit permission from Congress to regulate big chunks of the economy. Kraken argued that the SEC lacked the clear authority to boss around cryptocurrencies. ππ°
But Judge William Orrick, a man of reason and law, wasn’t swayed. He pointed out that crypto, while growing, isn’t quite as influential as sectors like energy or student loans. Plus, the SEC’s moves were grounded in existing securities laws, not an overreach of power. πβοΈ
“The SEC isn’t trying to pull a fast one or wield power it shouldn’t have,” the court observed, much to Kraken’s dismay. π£
Yet, there’s a silver lining for Kraken. Its “fair notice” defense lives on, claiming ignorance about violating the law. It argued that it was unaware certain digital assets on its platform were “investment contracts” under the Howey test. Judge Orrick found merit in this argument and let it sail on. π’β¨
“The major questions doctrine is a no-go in this case, but Kraken can still fight with its remaining defenses,” the judge conceded. π€
This legal twist is a significant chapter in the crypto industry’s regulatory drama, with other big names like Coinbase and Binance also battling the SEC’s reach. The SEC’s efforts to apply age-old securities laws to the crypto world have faced pushback. πͺοΈ
It all started in November 2023 when the SEC took aim at Kraken for allegedly acting as an unregistered securities exchange, broker, dealer, and clearing agency. The SEC alleges that Kraken has been raking in the dough, to the tune of hundreds of millions, by illegally enabling the trading of “crypto asset securities” since 2018. π°π«
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2025-01-27 13:40