(Bloomberg) -- Cryptocurrency exchange Kraken must face a US Securities and Exchange Commission lawsuit accusing it of operating an unregistered securities exchange, a judge ruled.

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“The SEC has plausibly alleged that at least some of the cryptocurrency transactions that Kraken facilitates on its network constitute investment contracts, and therefore securities, and are accordingly subject to securities laws,” US District Judge William H. Orrick wrote in an opinion published Friday in San Francisco federal court.

Representatives for Kraken and the SEC didn’t immediately respond to requests for comment.

Kraken had asked the judge to dismiss the case filed by the SEC in November. The ruling comes after Bloomberg News reported in early June that Kraken, one of the oldest cryptocurrency exchanges, was considering raising a final funding round ahead of a possible initial public offering.

The SEC under Chair Gary Gensler argues most digital tokens are unregistered securities that should be subject to its oversight. Gensler is highly critical of crypto exchanges and the digital-asset industry for alleged noncompliance.

The case is Securities and Exchange Commission v. Payward Inc., 23-cv-06003, US District Court, Northern District of California (San Francisco).

--With assistance from Chris Dolmetsch.

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