SEC partially wins lawsuit against Kraken

A U.S. federal court has issued a ruling that could impact the entire crypto industry. The SEC has achieved a partial victory in its lawsuit against one of the largest cryptocurrency exchanges, Kraken. However, the platform’s defense also succeeded in having its arguments acknowledged.

Key case details

On January 24, 2025, Judge William Orrick dismissed Kraken's argument that the SEC lacks authority to regulate cryptocurrency. The exchange referred to the major questions doctrine, but the judge noted that the SEC operates within Congress's authority and that blockchain assets are not yet comparable in impact to the energy market.

Kraken’s arguments found support

Despite the SEC’s partial victory, the judge recognized the validity of the exchange’s defense regarding the lack of "fair notice" of alleged violations.

Now, the SEC must prove that any market participant could reasonably understand that secondary market exchange transactions fall under the Howey Test and qualify as investment contracts.

The Kraken case could become a landmark for the entire crypto industry. Its outcome will determine how far the SEC can go in regulating digital asset trading in the future.