Cryptocurrency exchange Kraken has shared what it called “the real story” of the lawsuit against it by the U.S. Securities and Exchange Commission (SEC). Kraken also explained why it is moving to dismiss the case. “Crypto innovators in the United States should not have to fear retaliation for their political speech. They should be free to earnestly advocate for better law and more efficient markets,” Kraken explained.

Crypto exchange Kraken published a blog post on Thursday titled “The real story of the SEC’s suit against Kraken, and why Kraken is moving to dismiss the case.”

Kraken explained that on May 10, it testified before the House Financial Services Committee and the House Agriculture Committee about the U.S. Securities and Exchange Commission (SEC)’s “overreach in crypto and its flawed regulation-by-enforcement approach to policy making.” Marco Santori, Kraken’s chief legal officer, told lawmakers that this SEC strategy would not protect consumers and Congress should “create new rules for crypto, and, critically, that Congress should limit the SEC’s jurisdiction in favor of other agencies.” Kraken continued:

The next day, the SEC called Kraken to say it was going to sue. Crypto innovators in the United States should not have to fear retaliation for their political speech. They should be free to earnestly advocate for better law and more efficient markets.

Moreover, Kraken stated that it is “moving to dismiss the complaint,” emphasizing that the lawsuit “was timed to intimidate those who would question the SEC’s jurisdiction, and it fails to allege any securities were traded on Kraken, illegally or otherwise.”

Kraken explained: “Instead of identifying securities, the complaint asks the court to endorse a theory that there can be an investment contract without any contract, without any post-sale obligations or even any interaction at all between the issuer and the purchaser.” The crypto exchange stressed:

The court should not endorse this theory because it has no limiting principle. It would give the SEC boundless authority over commerce — from collectibles, such as sports memorabilia, trading cards, expensive watches, to commodities like diamonds.

“U.S. crypto exchanges should not have to operate amid an onslaught of regulatory enforcement actions, while jurisdictions around the world continue advancing constructive regulatory rulemaking,” Kraken noted. “The U.S. risks losing its standing as a world leader in innovation if it continues allowing its regulatory agencies to assert statutory authority without explicit permission from Congress.”

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