- California federal judge dismisses Kraken‘s defense against SEC based on regulatory jurisdiction.
- Judge Orrick rules against the “major questions doctrine” defense in SEC vs Kraken case.
- SEC maintains its authority to regulate cryptocurrency exchanges.
- Court decision strengthens SEC’s position in cryptocurrency oversight.
- Case continues with focus on alleged unregistered securities offerings.
Court Reinforces SEC’s Crypto Oversight Authority
A California federal judge has struck down a key defense strategy by cryptocurrency exchange Kraken in its ongoing legal battle with the Securities and Exchange Commission. Judge William Orrick rejected the exchange’s argument challenging the SEC’s jurisdiction over digital assets in a January 24 order.
Major Questions Doctrine Defense Rejected
The ruling specifically addressed Kraken’s use of the “major questions doctrine” – a legal principle that questions whether Congress explicitly authorized an agency to make decisions with broad economic and political significance. Judge Orrick determined that the SEC’s oversight of cryptocurrency trading falls within its congressionally mandated authority.
Implications for Crypto Regulation
This decision marks a significant development in the broader context of cryptocurrency regulation. The SEC filed its original complaint against Payward Inc. (doing business as Kraken) alleging the platform operated as an unregistered securities exchange, broker, and clearing agency.
The ruling reinforces the SEC’s regulatory position in the cryptocurrency space, following similar actions against other major exchanges. Historical precedents include the SEC’s enforcement actions against Binance and Coinbase in 2023, which similarly centered on questions of regulatory authority and the classification of digital assets as securities.
The case continues with remaining defense arguments intact, focusing on the core issue of whether Kraken’s cryptocurrency offerings constitute unregistered securities under federal law.
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