A group of attorneys general from eight U.S. states filed a joint opinion Thursday arguing that the Securities and Exchange Commission’s lawsuit against Kraken exceeds the regulator’s authority.
In a joint filing, the attorneys general of Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota and Texas note that the amicus does not support either party. It “opposes the SEC’s regulation of cryptocurrency assets without investment contracts because Congress has not delegated this authority to the SEC.”
The filing states that the state has a strong interest in preventing potential violations of consumer protection and other state laws due to the SEC’s attempts to regulate cryptocurrency assets as securities.
“The SEC’s enforcement actions exceed its delegated authority,” the filing added. “Courts should refuse to classify cryptocurrency assets as securities without investment contracts. “If the SEC exercises these non-delegated powers, it could endanger state consumers by preempting state statutes better tailored to the specific risks of non-securities products.”
The amicus brief follows Kraken’s motion last week to dismiss the SEC’s lawsuit. Kraken said in a blog post that the SEC’s claims were flawed. That’s because regulators claimed the cryptocurrency exchange was operating an unlicensed platform for “investment contracts” without identifying the “contracts” between Kraken users and token issuers.
Last November, the SEC filed a lawsuit against Kraken, accusing the cryptocurrency exchange of operating without registration, failing to prevent known conflicts of interest, and commingling customer funds, among other charges.
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