Home CryptocurrencyAltcoin State Attorneys General Argue SEC Overreached in Kraken Lawsuit

State Attorneys General Argue SEC Overreached in Kraken Lawsuit

by SuperiorInvest

Eight US state attorneys general filed a joint amicus brief, arguing that the Securities and Exchange Commission has exceeded its delegated power in the lawsuit against cryptocurrency exchange Kraken.

The brief was filed Feb. 29 by officials from Arkansas, Iowa, Mississippi, Montana, Nebraska, Ohio, South Dakota and Texas, along with other participants, including industry lobbyists.

According to the filing, state officials said they do not support either party, but instead “oppose the SEC's regulation of crypto assets without an investment contract because Congress has not delegated this authority to the SEC.” .

The attorneys general raised the argument that the SEC was expanding what is defined as an “investment contract” and that states are in a position to prevent potential overrides of state laws, including consumer protection laws, that could be violated by the SEC by attempting to regulate cryptoassets as securities. They said:

“The court should reject the categorization of cryptoassets as securities without an investment contract. “The SEC’s exercise of this undelegated authority puts state consumers at risk by preempting state statutes better suited to the specific risks of non-securities products.”

“The SEC's enforcement action exceeds its delegated powers,” the brief states. “Some state laws are more protective of consumers than federal securities laws,” they added.

Related: US Government Moved $922 Million of Seized Bitcoin After BTC Price Surpassed $60,000

This follows a motion filed by Kraken on February 22 in which it sought to completely dismiss the SEC lawsuit under similar claims of a “dangerous precedent” of overreach by the regulator.

Kraken argued that the SEC has no “limiting principle” and that this lawsuit, if granted to the SEC, would give the agency too broad authority. Kraken said it also gives the agency too broad authority, the crypto exchange argues.

The cryptocurrency exchange published a blog post on the same day, stating that the SEC's claim is erroneous in its argument that Kraken operates an unlicensed securities exchange, broker, trader and clearing agency, calling crypto tokens ” investment contracts” without pointing out any actual “contract.” ”between customers and the exchange.

In November, the SEC filed a lawsuit against Kraken, alleging that it operated without registration, commingled client funds, and failed to avoid conflicts of interest.

The SEC has filed similar complaints against other cryptocurrency-related companies, such as Coinbase, Binance, and the US branch of Bittrex, with the first two cases ongoing.

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