<p>A California federal judge has denied crypto exchange Kraken’s request to appeal a ruling that allows the U.S. Securities and Exchange Commission (SEC) to proceed with its lawsuit against the platform.</p>
<p>The decision, issued on Nov. 18 by Judge William Orrick, stated that an appeal at this stage would only delay the case’s resolution.</p>
<p>The SEC has alleged that Kraken’s cryptocurrency offerings qualify as investment contracts under the Howey test, which subjects them to federal securities laws. Judge Orrick agreed that the SEC had presented sufficient grounds to proceed with the case, emphasizing that only further discovery will determine whether Kraken’s operations meet all elements of the Howey test.</p>
<p>“Certification will not materially advance the termination of the litigation,” Judge Orrick wrote in his order. He noted that no court has ruled that formal contracts or post-sale obligations are prerequisites for investment contracts under Howey, contradicting Kraken’s claims.</p>
<h3 class="wp-block-heading" id="h-kraken-s-appeal-rejected">Kraken’s Appeal Rejected</h3>
<p>Kraken had sought an interlocutory appeal, arguing that there was significant legal uncertainty surrounding the SEC’s interpretation of securities laws. The exchange contended that the lack of a formal contract or post-sale obligations should exempt its offerings from being classified as investment contracts.</p>
<p>However, Judge Orrick rejected this argument, stating that multiple courts have previously dismissed similar claims. He also pointed out that Kraken had failed to cite any post-Howey case supporting its position.</p>
<h3 class="wp-block-heading" id="h-sec-s-case-against-kraken">SEC’s Case Against Kraken</h3>
<p>The SEC filed its lawsuit against Kraken in November 2023, accusing the exchange of operating without registering as an exchange, broker, dealer, or clearing agency.</p>
<p>Earlier this month, the SEC asked the court to dismiss three of Kraken’s defenses, asserting that the exchange had fair notice under existing laws about its obligations.</p>
<p>The SEC also argued that Kraken’s defenses could lead to irrelevant and burdensome discovery, hindering the lawsuit’s progress.</p>
<h3 class="wp-block-heading" id="h-what-s-next">What’s Next?</h3>
<p>With the denial of Kraken’s appeal, the case will proceed to the discovery phase, where both sides will gather evidence to support their arguments.</p>
<p>Kraken’s legal team has yet to comment on the judge’s decision. The lawsuit could set a major precedent for the regulation of cryptocurrency exchanges and the classification of digital assets under U.S. securities laws.</p>
<p>The post <a href="https://www.unlock-bc.com/132762/judge-rejects-krakens-bid-to-appeal-sec-lawsuit-ruling/" rel="noopener noreferrer nofollow">Judge Rejects Kraken’s Bid to Appeal SEC Lawsuit Ruling</a> appeared first on <a href="https://www.unlock-bc.com" rel="noopener noreferrer nofollow">UNLOCK Blockchain</a>.</p>

Judge Rejects Kraken’s Bid to Appeal SEC Lawsuit Ruling

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