U.S. SEC goes after Kraken crypto exchange in legal case over crypto regulations

The U.S. Securities and Exchange Commission (SEC) has pursued Kraken by filing a controversial judgment motion. The regulator’s motion seeks judgment in an ongoing case against the crypto exchange with a focus on Kraken’s defense. 

The U.S. SEC, under the leadership of its chair, Gary Gensler, has filed a motion of judgment against Kraken Exchange, a popular crypto exchange. The motion seeks judgment on an ongoing case between the Kraken exchange and the financial watchdog, focusing on Kraken’s key defenses, including “fair notice” and the “major questions doctrine.”

The U.S. SEC motion aims to hinder and limit further discovery into the commission’s regulatory policies surrounding the cryptocurrency industry. The motion has sparked a wave of controversies among the crypto community as members claim the regulator is attempting to shield the agency’s regulatory enforcement from investigations.

Kraken’s lawyer sheds light on U.S. SEC’s judgment motion

Last night, while Americans exercised their sovereign right to choose their political future, Gensler's deputies at the SEC filed a motion seeking judgment in Kraken's case on defenses like fair notice and the major questions doctrine. This motion transparently attempts to avoid…

— Michael O'Connor (@JDMikeJ) November 6, 2024

Kraken’s lawyer, Michael O’Connor, brought the issue to light through an X post dated November 6th. The lawyer claimed the regulator was attempting to shield its inconsistent defensive policies and how they have negatively impacted the U.S. economy. 

The lawyer also referenced how the U.S. SEC had failed in its case against Ripple. Michael O’Connor highlighted that what happened in the legal case between Ripple and the SEC could be replicated in the case against the exchange.

According to O’Connor, the case’s timing is not coincidental. The lawyer mentioned that Gensler’s days in office are numbered despite his attempts to double down on failed policies against the American people. 

Gary Gensler’s approach to crypto regulations has sparked an outcry from the crypto community. On September 24th, the chair was summoned and grilled by the House Financial Services Committee. The committee chair, Patrick McHenry, and Republican members of Congress questioned Gensler and other US SEC members on how he has regulated the crypto industry.

Trump promises to fire Gary Gensler on day 1 in office

Gensler’s policies have been so controversial that his name appeared on Donald Trump’s campaigns while speaking to the crypto community at the Bitcoin Conference 2024 in July. 

In his signature no-nonsense speech, Trump promised the crypto community that he would remove Gensler from office on his first day in office and appoint a new U.S. SEC chair. Trump also promised to consult crypto experts to develop better crypto policies.

Ripple’s CEO, Brad Garlinghouse, has been a long-term critic of the U.S. SEC and Gensler’s policies concerning digital asset regulations. As part of his congratulatory note to Donald Trump’s victory, Gralinghouse proposed a crypto checklist for the president-elect’s first 100 days in office, and the first in line was firing Gary Gensler on day 1.

Trump’s promise has birthed speculations on who is likely to replace Gensler once he is fired. Crypto attorney Jake Chervinsky shared his insights that Mark Uyeda, an SEC commissioner, is likely the strongest candidate but emphasized that Trump may prefer bringing someone new. 

The lawyer also stated that Trump will take office on January 20th and bring in a new set of leaders for federal agencies. He wrote that crypto policies will change immediately with the new leadership.