State Attorneys General Express Concerns Over SEC Lawsuit Against Kraken
According to CoinDesk, officials from multiple US states, including Texas, Montana, Arkansas, Iowa, Ohio, South Dakota, Mississippi, and Nebraska, along with industry lobbyists and state law enforcement officials, have jointly submitted a friend-of-the-court brief in the SEC’s lawsuit against Kraken. Various cryptocurrency industry lobbyists, such as the Digital Chamber of Commerce, Blockchain Association, and DeFi Education Fund, are also part of the submission.
The state attorneys general argue that the SEC’s lawsuit could potentially harm consumers and accuse the SEC of expanding the definition of “investment contract” to automatically classify cryptocurrencies as securities.
SEC Stripping States of Jurisdiction
The brief emphasizes that the states’ submission is not in support of Kraken but rather in opposition to the SEC. It states that the states strongly oppose the SEC’s attempt to classify cryptocurrencies as securities, as the exercise of unauthorized power by the SEC could expose consumers to risks. This could lead to similar future cases being subject to federal law, which may not be as suitable for specific risks associated with non-securities products as state laws, which better protect consumer rights.
The brief highlights that past state cases have helped clarify the definition of investment contracts.
In addition to accusing Kraken of listing 11 unregistered securities, the SEC also alleges that Kraken commingled user and corporate funds.
Kraken filed a motion to dismiss last week, arguing that the SEC failed to reasonably support its arguments and acted beyond its authority, similar to the arguments previously put forth by Coinbase and Binance.
(Kraken Faces SEC Accusations Again: Commingled Funds, Listing Numerous Unregistered Securities)
Kraken
SEC