In a significant turn of events, cryptocurrency exchange Kraken and the United States Securities and Exchange Commission (SEC) have come together to file a joint stipulation along with a proposed order. This legal maneuver is part of Kraken’s strategy to challenge a recent court order that favored the SEC. The latest court filing, dated December 23, reveals that the plaintiff, the US SEC, alongside defendants Payward Inc. and Payward Ventures (collectively known as Kraken), have submitted a formal stipulation.
Parties File Joint Statement
On November 19, 2024, the involved parties presented a joint statement addressing a discovery dispute. This dispute centers around the SEC’s objections to Kraken’s requests for specific documents. These documents pertain to three main areas: Bitcoin and Ether, the SEC’s public statements and testimonies regarding digital assets, and the SEC’s internal trading policies on these assets. However, in the preceding month, the court assigned the resolution of discovery disputes and any further discovery matters in this case to Magistrate Judge Robert M. Illman. Despite Kraken’s efforts to compel the production of these documents, the request was denied. Nonetheless, Kraken remains firm in its belief that these documents are crucial for the case.
SEC and Kraken Agree to Stay Deadline
With the original deadline to file objections set for December 30, Kraken plans to submit revised requests for production that align with the court’s order. Importantly, both the US SEC and Kraken have agreed to extend the deadline for filing objections to March 31, 2025, allowing further discussions about a possible extension. Kraken is represented by the distinguished attorney Matthew C. Solomon, renowned for his involvement in high-profile legal matters, including the successful defense of Ripple CEO Brad Garlinghouse. Solomon’s expertise has proven instrumental in achieving dismissals and favorable rulings in complex securities cases.
Kraken’s legal strategy included a request for an order compelling the SEC to disclose documents explaining why Bitcoin and Ether were not part of the SEC’s complaint, particularly given their similar trading nature to other tokens on Kraken’s platform. Nonetheless, the magistrate judge deemed Kraken’s arguments “unpersuasive.” The broader cryptocurrency industry, alongside Kraken, continues to emphasize the relevance of former SEC official William Hinman’s public speech in determining Bitcoin and Ether’s regulatory status under federal securities laws. Kraken has further advocated for the fair notice defense and invoked the major questions doctrine within the ongoing lawsuit.
Ripple CLO Advocates for Resolution of Ripple vs SEC Lawsuit
In a related development, Ripple’s Chief Legal Officer, Stuart Alderoty, has publicly called for the resolution of the ongoing legal battle between Ripple and the SEC. Alderoty has urged the incoming administration to address what he describes as the “lingering stain of Hinman” on the agency. He emphasized the need to rebuild trust and suggested that resolving this issue is a critical first step. Alderoty’s statements reflect a broader industry sentiment seeking clarity and fairness in the regulatory landscape governing digital assets.
As the legal discourse between Kraken and the US SEC unfolds, the outcome of these proceedings is poised to have significant implications for the cryptocurrency sector. The case continues to highlight the ongoing challenges and legal uncertainties faced by digital asset platforms in navigating regulatory frameworks.
