SEC Scores a Win Against Kraken as Judge Rejects Key Defense

Federal Judge William Orrick dismissed Kraken’s “major questions doctrine” defense. This means one of the exchange’s main arguments — that the SEC doesn’t have power over crypto, as granted by Congress — was rejected.

The judge determined that the SEC wasn't overstepping its role.

For the SEC, this is a partial victory, as it strengthens its position in regulating the cryptocurrency market.

That said, the judge agreed that Kraken’s “fair notice” defense can still be considered. Kraken argued that they weren’t properly warned by the SEC about which actions would violate the law. This defense hasn’t been dismissed yet and will be reviewed in more detail.

Recent updates in the case could also impact similar cases involving Ripple, Binance, and Coinbase, all of which have made similar arguments.

The SEC took legal action against Kraken in November 2023, alleging that the exchange had been operating as an unregistered securities platform since 2018. This lawsuit is part of the SEC's broader crackdown on crypto exchanges, with other platforms also being targeted for possible violations of securities laws.

While the crypto industry hoped for a more friendly business environment and clearer regulations under President Trump, this case shows that regulatory challenges are far from over.