State Attorneys General Challenge SEC's Authority in Kraken Lawsuit

In a joint amicus brief, eight state attorneys general question the Securities and Exchange Commission's (SEC) jurisdiction in the lawsuit involving Kraken, a cryptocurrency exchange.

State Officials and Industry Lobbyists Challenge SEC's Authority Over Crypto Regulation

State officials from Arkansas, Iowa, Mississippi, Montana, Nebraska, Ohio, South Dakota, and Texas, alongside industry lobbyists, filed a brief on Feb. 29. They assert that the SEC is exceeding its authority by regulating crypto assets without congressional delegation.

Attorneys General Warn SEC: Categorizing Crypto as Securities Risks State Consumer Protections

The attorneys general contend that the SEC's attempt to categorize crypto assets as securities without an investment contract could jeopardize state consumer protection laws. They argue for the rejection of this categorization, emphasizing that certain state statutes offer better consumer protection than federal securities laws.

Kraken Fights Back: Moves to Dismiss SEC Lawsuit Citing Regulatory Overreach

Kraken filed a motion on Feb. 22, seeking dismissal of the lawsuit, citing concerns over regulatory overreach. The exchange highlights the lack of a limiting principle in the SEC's actions, which could grant the agency excessive authority.

Kraken's rebuttal further challenges the SEC's claims, particularly regarding operating as an unlicensed securities entity and mishandling client funds. The exchange disputes the SEC's characterization of crypto tokens as "investment contracts" without evidence of contractual agreements.

SEC Files Lawsuit Against Kraken and Other Crypto Exchanges for Regulatory Violations

In November, the SEC filed a lawsuit against Kraken, alleging regulatory violations. Similar complaints have been lodged against other crypto firms, including Coinbase, Binance, and Bittrex's U.S. branch.

Legal Battle Brews as State Attorneys General and Industry Stakeholders Challenge SEC's Regulatory Reach in Kraken Lawsuit

State attorneys general and industry stakeholders contest the SEC's regulatory scope in the Kraken lawsuit, warning against potential encroachments on state consumer protection laws. Kraken, in response, challenges the SEC's allegations and underscores concerns over regulatory overreach. The outcome of this legal battle could have significant implications for the broader crypto industry.

The ongoing dispute between state attorneys general and the SEC signals a contentious legal battle, raising uncertainties about regulatory clarity and potential disruptions in the crypto market.