Kraken yesterday filed a motion to dismiss the US Securities and Exchange Commission (SEC) lawsuit that was filed in November.
The lawsuit accused the crypto platform of several charges, including operating without registration and failing to avoid known conflicts of interest, as well as commingling customer funds.
In a blog post, Kraken has reported the SEC's lawsuit is flawed. The agency argued that Kraken operates an unlicensed platform for "investment contracts" without identifying any specific contracts between users and token issuers.
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However, Kraken has argued that none of the assets listed in the complaint can be considered investment contracts under the law. According to the company, the SEC is required to identify a specific contract for it to be classified as an investment contract based on established legal precedent.
Kraken has also challenged the applicability of the Howey test, commonly used by US authorities to determine whether sales of securities are considered investment contracts. The company has stated that crypto tokens do not meet the criteria of the Howey test.