The U.S. Securities and Exchange Commission (SEC) has petitioned the Northern District Court of California to reject three of Kraken's defenses regarding allegations that the crypto exchange has acted illegally.

In a motion submitted on November 5, the SEC dismissed Kraken's claims about the ambiguity of securities laws concerning virtual assets. It also challenged assertions that the exchange received unfair warning about its conduct violating securities law.

Additionally, the SEC is calling for the dismissal of Kraken's "major questions doctrine" defense, which suggests agencies should not broaden their regulatory scope without explicit permission from Congress.

The SEC filed a lawsuit against Kraken in November 2023 for operating as an unregistered securities exchange, broker, dealer, and clearing agency, asserting that Kraken unlawfully profited by facilitating the trading of crypto asset securities since at least September 2018. Kraken's request to dismiss the case was denied in August.

"The Court rejected Kraken's argument that the major questions doctrine barred this case and affirmed that the 'investment contract' definition under the Securities Exchange Act of 1934 is established law," the SEC's motion claims.

Kraken has "proposed numerous discovery demands for extensive documents and substantial admissions pertaining to these legally untenable defenses," as stated in the court filing.

"The Court should dismiss these defenses to ensure appropriate discovery parameters, streamline summary judgment, conserve judicial and party resources, and prevent Kraken from attempting to re-litigate the same matters at every potential stage of this litigation."