Ripple, Kraken Legal Chiefs Weigh in on Court Decision in SEC's Crypto Securities Lawsuit

The chief legal officers at Kraken and Ripple have weighed in on the Federal Court for the Northern District of California’s recent decision in the U.S. Securities and Exchange Commission’s lawsuit against Kraken. “Another court, this time in the Kraken case, confirms there’s no such thing as a ‘crypto asset security.’ Bad news for the SEC, whose entire regulation-by-enforcement strategy hinges on that failed premise,” said Ripple’s chief legal officer.

‘Bad News for the SEC,’ Says Ripple’s Legal Chief

Marco Santori, the chief legal officer at cryptocurrency exchange Kraken, commented on the ruling by the Federal Court for the Northern District of California on Friday. The court denied Kraken’s request to dismiss a lawsuit by the U.S. Securities and Exchange Commission (SEC) claiming that certain crypto tokens traded on Kraken’s platform are considered securities.

“Today, the Federal Court for the Northern District of California ruled, as a matter of law, that none of the tokens trading on Kraken are securities,” Santori stated, emphasizing: “This is a significant win for Kraken, for the principle of clarity and for crypto users everywhere. It also confirms Kraken’s long-standing position that it does not list securities.”

Additionally, Santori noted that the court criticized the SEC’s definition of “crypto asset security” as “unclear at best and confusing at worst,” while also questioning the SEC’s portrayal of Kraken’s stance on requiring a “written contract” for a security classification.

The Kraken legal chief added:

Fundamentally, the court in Kraken’s case made the same distinction as in the Ripple case: A token isn’t a security, but agreements around a token could be.

Santori further emphasized the broader consequences for the crypto industry, warning that the SEC’s enforcement-based regulatory approach could lead to “extensive, expensive, and time-consuming discovery” for numerous transactions. He urged Congress to establish a comprehensive market structure framework to ensure regulatory clarity and promote the growth of blockchain technology.

He concluded: “Today’s ruling confirms what we’ve been saying all along: the SEC cannot credibly regulate crypto by enforcement.”

Commenting on Santori’s remarks, Ripple’s chief legal officer, Stuart Alderoty, stated on X:

Another court, this time in the Kraken case, confirms there’s no such thing as a ‘crypto asset security.’ Bad news for the SEC, whose entire regulation-by-enforcement strategy hinges on that failed premise.