Kraken vows to ‘vigorously defend’ SEC lawsuit amid Congressional support

Cryp­to exchange Krak­en would “vig­or­ous­ly defend” itself against the law­suit brought by the U.S. Secu­ri­ties and Exchange Com­mis­sion (SEC), accord­ing to a Nov. 20 statement.

Sim­i­lar­ly, CEO David Rip­ley and co-founder Jesse Pow­ell strong­ly dis­put­ed the regulator’s claim, assert­ing that the exchange does not list securities.

Kraken products unimpacted

Krak­en said the SEC law­suit did not impact its prod­ucts and vowed to keep ser­vic­ing clients with­out interruption.

The exchange said the regulator’s alle­ga­tions were “incor­rect as a mat­ter of law, false as a mat­ter of fact, and dis­as­trous as a mat­ter of policy.”

“The SEC has pro­mul­gat­ed no rule describ­ing how an order in a dig­i­tal asset should be matched, no guid­ance on how a trade should be cleared, and artic­u­lat­ed no stan­dards for how to bro­ker a dig­i­tal asset trans­ac­tion,” Krak­en wrote. “The alle­ga­tion is hol­low; there is no such thing as an exchange, bro­ker-deal­er, or clear­ing agency for invest­ment con­tracts. The SEC is demand­ing com­pli­ance with a regime that doesn’t exist.”

Executives slam SEC

Rip­ley empha­sized the firm’s com­mit­ment to defend­ing its stance and explic­it­ly stat­ed that they do not list secu­ri­ties tokens.

Rip­ley fur­ther crit­i­cized the SEC for urg­ing exchanges to “come in and reg­is­ter” with­out pro­vid­ing clear reg­u­la­to­ry guide­lines. He added:

“[The SEC] alle­ga­tions are fac­tu­al­ly incor­rect, con­trary to law, and the wrong way to cre­ate pol­i­cy in the Unit­ed States.”

Echo­ing Ripley’s sen­ti­ments, Pow­ell described the SEC as an extor­tion­ist and its accu­sa­tions as an affront to Amer­i­ca while ques­tion­ing the regulator’s motive.

Accord­ing to him, finan­cial­ly con­strained cryp­to firms should recon­sid­er oper­at­ing with­in the U.S. as the SEC knows “that a real fight will like­ly cost [over] $100 mil­lion and valu­able time.”

Congress support

Mean­while, mem­bers of the U.S. Con­gress, includ­ing Sen­a­tor Cyn­thia Lum­mis and War­ren David­son, have shown sup­port for the exchange.

Lum­mis crit­i­cized the SEC’s enforce­ment-dri­ven approach and urged Con­gress to estab­lish a clear reg­u­la­to­ry frame­work. She empha­sized the need for explic­it rules dis­tin­guish­ing secu­ri­ties from com­modi­ties. She said:

“The SEC can­not con­tin­ue rul­ing by enforce­ment. Cryp­to asset com­pa­nies have repeat­ed­ly tried to get guid­ance from the SEC only to be hit with enforce­ment actions, caus­ing unnec­es­sary harm to consumers.”

On the oth­er hand, David­son repost­ed a social media post from pro-cryp­to lawyer John Deaton urg­ing Krak­en cus­tomers to have their voic­es heard.