Kraken's latest reply to the SEC's motion to dismiss hinges on the extent to which one can interpret the SEC's jurisdiction by using the Howey test which determines what is and is not a security. It does so by determining whether four criteria are met - an investment of capital, in a common enterprise, with the expectation of profit, driven by the efforts of others.
"The SEC cannot satisfy Howey’s additional requirements that there be investments of money in a common enterprise with a reasonable expectation of profits based on the efforts of others," Kraken's lawyers wrote.