The Crypto Roundup: 01 March 2024 | CryptoCompare.com

State attorneys general from eight states are pushing back against the U.S.  Securities and Exchange Commission’s (SEC) lawsuit against cryptocurrency exchange Kraken, arguing that the agency overstepped its authority.

In an amicus brief filed Thursday, attorneys general from Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota, and Texas joined forces with industry groups and other participants to challenge the SEC’s approach.

The filing contends that the SEC is exceeding the regulator’s legal boundaries by expanding the definition of an “investment contract” to encompass cryptocurrencies, which the officials argue ”are not automatically securities.”

This broad interpretation, they warn, could potentially harm consumers by “potentially preempting state statutes better tailored to the specific risks of non-securities products.“

The SEC’s lawsuit against Kraken, filed last fall, accuses the exchange of  operating without registration, failing to prevent known conflicts of interest, and commingling user fund. The exchange has challenged the lawsuit, contending the case is  operating without registration, failing to prevent known conflicts of interest, and commingling user funds.

The exchange argues that eight decades of precedent established by the Supreme Court and the Ninth Circuit Court require the SEC to identify a specific contract between users and token issuers to qualify as an investment contract, and assets crypto tokens don’t satisfy the Howey test, used to define securities.

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• Source: https://www.cryptocompare.com/email-updates/daily/2024/mar/01/