Lawyers representing Kraken and the U.S. Securities and Exchange Commission filed the filing

Lawyers representing Kraken and the U.S. Securities and Exchange Commission (SEC) have presented conflicting arguments to a federal judge over whether an exchange’s digital assets can be considered securities.

At a June 20 hearing in the U.S. District Court for the Northern District of California, Payward – the company that does business as Kraken – attorney Matthew Solomon and SEC attorney Peter Morris met before Judge William Orrick to consider the motion to dismiss the exchange filed in February. . The judge indicated he was “inclined to deny” the motion to dismiss, saying it was “acceptable” to offer and sell digital assets as investment contracts on a cryptocurrency exchange.

In arguments before the judge, Solomon said there were significant differences in the cases between the SEC, Terraform Labs and Telegram. He also cited Judge Analisa Torres’ decision in SEC v. Ripple Labs, in which the judge ruled that the

The SEC’s argument focused on treating Kraken as an “ecosystem” in which tokens are sold as investment contracts — or “concepts,” the Commission asserted — which would apparently make it securities according to the Howey test. The exchange’s legal team disputed these legal theories.

“I think just bringing up the idea of ​​a cryptocurrency ecosystem – that’s not how the rules should be implemented,” Solomon said. “Cryptocurrencies don’t deserve better than anyone else, but the rules should apply to them the same as everyone else.”

Kraken’s lawyer added:

“Not only does the SEC have to prove that there was a security under Howie, it has to prove that that security was traded, traded or settled on Kraken. This is impossible given the way they have structured their argument.

Judge Orrick did not rule on the motion to dismiss during the hearing, but noted that after Kraken and the SEC’s arguments, he was still inclined to deny it. Furthermore, he added, “one year should be enough” to know if the case is moving forward.

about: Kraken recovers $3 million from CertiK, ending its bug bounty saga

The SEC filed an enforcement action against Kraken in November 2023. Before the SEC filed the case, Kraken settled with the SEC in February 2023, agreeing to pay $30 million and stop providing services or software staking to American customers.

Although Ethereum (ETH) was not explicitly mentioned in the SEC’s case against Kraken, the token has been at the forefront of some cryptocurrency companies fighting the regulator in court. Reports in March indicated that the SEC was considering classifying ETH as a security and possibly taking enforcement action against companies managing the token.

In April, Blockchain Consensus filed a lawsuit against the commission after receiving notice from Wells of a potential Ethereum-based enforcement action. The SEC closed its investigation on June 19, indicating that it considered ether to be a commodity.

review: Godzilla vs. Kong: SEC Faces Uphill Battle Over Legal Power of Cryptocurrencies

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