SEC Drops Lawsuit Against Crypto Exchange Kraken

The US Securities and Exchange Commission (SEC) has agreed to drop its lawsuit against Kraken, marking a major reversal in its approach to crypto enforcement. 

This decision comes amid a broader shift. In the past week, the SEC dropped at least six lawsuits and legal actions against crypto firms, including Coinbase and MetaMask.

SEC Vs. Kraken is Finally Over

The lawsuit against Kraken, filed in November 2023, accused the exchange of operating as an unregistered securities exchange, broker, dealer, and clearing agency. 

The SEC claimed that Kraken allowed the trading of crypto asset securities without proper registration, depriving investors of necessary protections such as audits, disclosures, and oversight.

Kraken denied the allegations and argued that the SEC had failed to establish clear guidelines on whether digital assets should be classified as securities. 

The exchange filed a motion to dismiss the case, citing regulatory uncertainty and a lack of fair notice. A federal judge allowed parts of Kraken’s defense to proceed, but the SEC continued to press its claims.

The agency’s decision to drop the lawsuit reflects a changing stance on crypto enforcement. Over the past week, it has quietly withdrawn multiple legal actions against major crypto companies. 

This shift follows increasing pressure from lawmakers and industry leaders who have criticized the SEC’s aggressive regulatory approach.

Kraken’s victory may set a precedent for other crypto firms facing similar lawsuits. The decision to drop these cases signals a possible recalibration of the SEC’s strategy, raising questions about how crypto regulation will evolve in the coming months.

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