State Attorneys General Question SEC’s Authority in Kraken Lawsuit A group of state attorneys
general has challenged the U.S. Securities and Exchange Commission’s
(SEC) authority in the ongoing lawsuit against the cryptocurrency exchange Kraken. On Thursday, state law enforcement officials from Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota, and Texas filed a joint amicus brief in the
SEC’s suit against Kraken. They argued that the SEC’s lawsuit could harm consumers and accused the agency of expanding the definition of an
“investment contract.” The attorneys general emphasized that cryptocurrencies should not automatically be
classified as securities. The filing says that the states are not supporting the exchange but are opposing the federal regulator.
They expressed concerns about potential preemption of state consumer protection laws and state regulations related to
cryptocurrencies.
The attorneys general emphasized that some state laws offer better consumer protection than federal securities laws and that the
SEC’s exercise of undelegated authority puts consumers at risk. “States have a strong interest in preventing the potential preemption of consumer protection and other state laws by the SEC’s attempt to regulate crypto
assets as securities,” the filing said.
