A California judge has rejected Kraken’s motion for interlocutory appeal, saying in a Monday decision that allowing an appeal would only “delay resolution” of the U.S. Securities and Exchange Commission’s (SEC) ongoing case against the crypto exchange.
Kraken, the second-largest crypto exchange in the U.S., filed a motion for interlocutory appeal (a type of appeal that challenges a judge’s non-final decision while allowing other aspects of a case to move forward) in September, a month after Judge William Orrick of the U.S. District Court for the Northern District of California ruled that the SEC had plausibly alleged that the cryptocurrencies sold on Kraken’s platform may be securities under the Howey Test.
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In their September motion, Kraken’s lawyers argued that Orrick should grant them permission to appeal his decision with a higher court, arguing that Orrick’s order “involve[d] a controlling question of law as to which there is a substantial ground for difference of opinion” and that “an immediate appeal…may materially advance the termination of the litigation.”
But Orrick was unmoved, testily reminding Kraken’s lawyers in his Monday ruling that allowing a motion for interlocutory appeal is “entirely discretionary” and rejecting their hypothesis that an appeal could speed up the case.
“Fundamentally, I do not believe that certification will materially advance the ultimate termination of the litigation,” Orrick wrote. “While the SEC has plausibly alleged its theory of securities violations against Kraken, only discovery will establish whether the sales, trades, and exchanges on Kraken truly met all the Howey elements… A complete record is necessary to answer those questions. Certification at this stage would only delay resolution.”
The SEC sued Kraken last November for allegedly operating as an unregistered securities exchange, broker, dealer, and clearinghouse, and requesting disgorgement and civil penalties as well as permanent injunctions for the crypto exchange. Kraken denied any wrongdoing and moved to dismiss the case, but the motion was denied in August.