A California judge has turned down Kraken's request for an interlocutory appeal, stating that allowing such an appeal would only serve to prolong the resolution of the ongoing case brought by the U.S. Securities and Exchange Commission (SEC) against the cryptocurrency exchange. Kraken, the second-largest crypto exchange in the U.S., had filed the motion for interlocutory appeal in September, following a ruling by Judge William Orrick of the U.S.
District Court for the Northern District of California that the SEC had made a plausible case that the cryptocurrencies sold on Kraken's platform may be considered securities under the Howey Test. In their motion, Kraken's lawyers contended that Orrick's decision raised a significant legal question that warranted review by a higher court, and that an immediate appeal could potentially expedite the conclusion of the litigation. However, Orrick disagreed, pointing out that granting such a motion is entirely at his discretion and that he did not believe an appeal at this stage would substantially accelerate the case's resolution. 'I do not think certification will significantly advance the ultimate resolution of the litigation,' Orrick stated.
'While the SEC has made a plausible case for securities violations against Kraken, only the discovery process will determine whether the transactions on Kraken's platform meet all the criteria set out in the Howey Test... A complete record is necessary to answer these questions, and certification at this point would only serve to delay the resolution.' The SEC initially sued Kraken in November for allegedly operating as an unregistered securities exchange, broker, dealer, and clearinghouse, seeking disgorgement, civil penalties, and permanent injunctions. Kraken denied any wrongdoing and attempted to have the case dismissed, but this motion was denied in August.