SEC Lawsuit Against Kraken Proceeds After Judge’s Decision

Bloomberg has reported that cryptocurrency exchange Kraken may face legal action from the U.S. Securities and Exchange Commission (SEC) for not registering as a cryptocurrency exchange.

In a related development, Kraken has been permitted to settle a lawsuit initiated by the SEC, which claims the platform operated as an unregistered securities exchange.

U.S. District Judge William H. Orrick’s decision allowed the case to move forward, representing a notable moment in the SEC’s ongoing scrutiny of the cryptocurrency sector.

Judge Orrick stated in a Friday opinion issued in San Francisco federal court that the SEC has reasonably argued that some cryptocurrency transactions on Kraken’s platform might be considered investment contracts, and therefore, securities subject to regulation.

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Kraken had previously attempted to have the lawsuit, initially filed by the SEC in November, dismissed. However, the judge’s ruling means the legal challenge will continue.

This decision follows earlier reports from Bloomberg News in June, indicating that Kraken, a well-established cryptocurrency exchange, was considering a final financing round ahead of a potential initial public offering (IPO).