California Federal Court: Crypto Assets on Kraken Are Not Securities From Bits.media

District Judge William H. Orrick said the criteria the SEC uses to evaluate whether cryptoassets are securities are “at best vague and at worst confusing.”

Kraken’s chief legal officer, Marco Santori, responded enthusiastically to the court’s action, which means that none of the crypto assets traded on Kraken are securities. According to the lawyer, this should set a precedent regarding the classification of cryptocurrencies, which has long been a topic of discussion among legal advisors and market participants.

Suntory mentioned the company’s case – last year the court found that the XRP coins it issues and sells on the secondary market are not considered securities. According to Suntory, the existence of a mark is not the same as an investment contract, since the classification depends on the agreements and contracts related to the transactions. Ripple’s partial victory created a more favorable environment for the crypto industry, providing relative regulatory clarity and challenging the SEC’s aggressive strategy, Suntory said.

“This is a huge win for Kraken and cryptocurrency users. The SEC has lost hands and will not be able to rely on its theory of cryptocurrencies as securities in the future. After all, the department must prove that the conditions of the Howey test are met for each proposed transaction on Kraken. The court decision confirms what we have been saying all along: the SEC cannot effectively regulate cryptocurrencies through enforcement,” wrote Marco Santori on social media X.

The lawyer called on the US Congress to clarify the regulation of cryptocurrencies to protect consumers and promote market development. Creating clear guidelines could eliminate legal uncertainty and benefit not only Kraken and other crypto exchanges, but the entire digital asset ecosystem, Suntory concluded.

In November 2023, the SEC charged Kraken with trading in unregistered securities and failing to register as a broker-dealer. The regulator also said that Kraken was commingling client funds with its own funds. Kraken denied the agency’s allegations, and in February asked the court to dismiss the SEC’s lawsuit.

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