The U.S. Securities and Exchange Commission (SEC) has filed a request with the Northern District Court of California to undermine the primary defenses of the cryptocurrency exchange Kraken in a lawsuit against it. The SEC accuses Kraken of violating securities laws by presenting cryptocurrencies as “investment contracts” and claims it had previously warned the exchange about these issues. Kraken’s lawyers argue that this move aims to obstruct the evidence-gathering process related to the SEC’s contradictory policies. The SEC seeks to invalidate Kraken’s defenses, including the “big questions doctrine” and “due process violations,” which are viewed by Kraken as crucial for protecting its operations against regulatory excesses.
Kraken Emphasizes “Regulatory Uncertainty” in Defense
The SEC has labeled Kraken’s defense regarding the lack of regulatory clarity as “meritless.” The U.S. regulatory body contends that the exchange received sufficient warnings about its cryptocurrency offerings potentially being classified as securities. In its Tuesday filing, the SEC emphasized that federal securities laws also apply to cryptocurrencies offered for investment purposes, a stance that underpins many legal conflicts the SEC has faced with other cryptocurrency firms.
The SEC’s filing stated, “The court should narrow the evidence-gathering process by dismissing these defenses, facilitate the summary judgment process, protect judicial and party resources, and prevent Kraken from revisiting the same issues at every stage.”
Kraken’s attorney, Michael O’Connor, criticized the SEC’s timing and intent, labeling the move as a “Election Day tactic.” He referenced a similar SEC request that was rejected in the Ripple 
$2 case, asserting that Kraken’s defenses would also hold validity in court.
Kraken Requests a Jury Trial
The SEC’s request came immediately after Kraken’s demand for a jury trial. The exchange has also contested the classification of 11 cryptocurrencies, including Solana 
$200 (SOL), Cardano 
$0.930471 (ADA), and Polygon (MATIC), as securities. Kraken claims it has repeatedly attempted to submit registration requests but has faced obstacles during this process. Additionally, they argue that SEC Chair Gary Gensler has inconsistently enforced securities laws in a manner detrimental to the cryptocurrency sector.
This development occurred amid increasing speculation about SEC Chair Gensler potentially resigning soon. Following Donald Trump’s election victory, analysts suggest Gensler may step down by the end of the year, supported by a trend of SEC chairs resigning during leadership changes.
