Kraken says the crypto exchange is confident it will win the legal battle with the US Securities and Exchange Commission (SEC).
Last week, USA; District Judge William H. Orrick denied Kraken’s request to dismiss the case brought by the SEC, claiming the exchange violated securities laws.
The regulator claims that Cardano (ADA), Algorand (ALGO), Solana (SOL) and several other coins traded on Kraken are ‘crypto asset securities’.
Marco Santori, Kraken’s chief legal officer say that although Judge Orrick decided to keep the case ongoing, the exchange expects to win against the SEC given the court’s ruling that none of the tokens traded on the exchange are securities.
“The SEC has unequivocally lost on this ‘tokens are securities’ theory, and should not rely on it in the future.
Instead, it will have to prove that the Howey test factors have been met for each alleged transaction on Kraken.
That is not the case, and we look forward to proving this during discovery. Kraken will fight and Kraken will win.”
The Howey test is a legal criterion often cited to determine whether or not a transaction qualifies as an investment contract.
According to the Howey test, an investment contract is “a contract, transaction or arrangement whereby a person invests his money in a common enterprise and is led to expect a profit solely from the efforts of the promoter or a third party.”
Santori also urges US lawmakers to take action and address regulatory issues in the crypto sector.
“To provide clarity for the industry, protect consumers, and promote the growth of blockchain technology, Congress must adopt a comprehensive market structure framework.
We applaud everyone in our government who is working tirelessly to make this happen and we thank the Court for its hearing on this case.”
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