Coin Edition -
- Eight state attorneys general in the United States filed an amicus brief, questioning the SEC’s “regulatory power grab.”
- The lawyers warn that the SEC’s undelegated authority puts consumers at risk.
- Kraken’s Chief Legal Officer Marco Santori points out the inconsistency in the SEC’s definition of investment contracts.
In a novel turn in the Kraken-SEC legal battle, eight state attorneys general in the United States filed an amicus brief, questioning the Securities and Exchange Commission’s (SEC) “regulatory power grab.” Kraken’s Chief Legal Officer, Marco Santori, shared an X post, shedding light on the state attorneys’ claims against the regulators.
Last week: You read @krakenfx's motion to dismiss the SEC’s case against crypto.Today: You’re reading about “a regulatory power grab,” how “the SEC has appointed itself crypto regulator“, and that ”the SEC… puts consumers at risk”But wait. That’s not Kraken talking.…— Marco Santori (@msantoriESQ) March 1, 2024
Kraken has been advocating for Congress’s intervention in the SEC’s autocratic power over the crypto sector. Though the SEC later accused the company of operating as an “unregistered securities exchange, broker, dealer, and clearing agency,” Kraken fought against them, requesting the court to dismiss the lawsuit. The company CEO, Dave Ripley, criticized the regulator’s claims as “factually incorrect, contrary to law, and the wrong way to create policy in the United States.”
Santori, in his post, pointed out the inconsistency in the agency’s claims that contradict themselves. Initially, they argued that a token is an “investment contract” and, therefore, a “security.” Later, they modified their statement, arguing that the token isn’t an investment contract but a code, and the token is “sold” as an investment contract. Their final claim contradicted the previous claims, arguing that the token “represents” an investment contract.
In the latest development, attorneys general from Arkansas, Iowa, Mississippi, Montana, Nebraska, Ohio, South Dakota, and Texas voiced their opinions against the SEC’s misleading definition of investment contract. They argued,
The SEC wrongly expands the definition of investment contract in this enforcement action to any asset that could increase in value… The SEC’s theory functions as a regulatory power grab through an expansive interpretation of “investment contract” that would encompass many non-securities transactions.
Further, the attorneys posited that the SEC is radically expanding its authority into areas of traditional state regulation, altering the laws that are more consumer-protective. They warned, “The SEC’s exercise of this undelegated authority puts consumers at risk.”
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