The U.S. Securities and Exchange Commission (SEC) has secured a notable victory against cryptocurrency exchange Kraken. Judge William Orrick denied Kraken’s attempt to dismiss the SEC’s lawsuit, reinforcing the regulator’s stance on crypto assets.
This ruling comes after a controversial decision last July by Judge Analisa Torres in favor of Ripple, which recognized the secondary sales of XRP as non-securities.
However, Judge Orrick aligned more closely with the SEC’s arguments, emphasizing that the case involves the exchange of third-party tokens on secondary platforms, a situation not previously addressed by the courts.
Judge Orrick supports the SEC’s interpretation that the secondary market transactions of crypto assets meet the criteria of the Howey test, framing them as investment contracts.
The ruling also dismissed concerns that the SEC’s case violated the Major Questions Doctrine, with Judge Orrick noting that the cryptocurrency industry is not large enough to warrant its application.
The SEC’s lawsuit against Kraken includes several crypto assets, such as Cardano (ADA) and Solana (SOL).
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