Kraken has asked the US court to dismiss the SEC's lawsuit against it

Golden Finance reported that according to court documents filed in the Northern District of California, the cryptocurrency exchange Kraken has asked the U.S. court to dismiss the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against it to avoid a "major adjustment" to the U.S. financial regulatory structure. The SEC initially sued Kraken in November last year, accusing it of not registering as a broker, clearing house or exchange. This came a few months after a settlement was reached on charges of Kraken's former pledge service. Kraken's latest response to the SEC's motion to dismiss depends on the extent to which one can interpret the SEC's jurisdiction by using the Howey test to determine what is and is not a security.

Kraken's lawyers wrote that the SEC cannot meet Howey's additional requirements of investing funds in a common enterprise and making reasonable expectations of profits based on the efforts of others. This would greatly expand the SEC's jurisdiction over a range of investment activities that have never been entrusted to the agency, leaving Howey deeply hit. Such a major reorganization of the U.S. financial regulatory structure should be debated in Congress rather than in court.