Kraken Agrees to $30 million Settlement with SEC and Stops U.S. Customer Staking Program

Yahoo Finance | Jennifer Schonberger and David Hollerith | Feb 9, 2023

Image: Freepik

Crypto exchange Kraken is paying $30 million to settle charges Thursday with the Securities and Exchange Commission for allegedly violating securities rules by failing to register its crypto asset staking-as-a-service program with the SEC.

• Asked whether the SEC was moving to eliminate staking as a feature offered by the crypto industry, officials said the SEC does not regulate industries, it regulates conduct.
• Before the charges, Kraken's staking service accounted for 7.4% of staking activity on Ethererum while Coinbase accounts for another 12.5%, according to data provided by Dune. Staked ether can't be unstaked until the protocol's Shanghai upgrade anticipated in March.
• With the exception of staked ether, all U.S. Kraken clients will automatically be unstaked and will no longer earn staking rewards. Staking services for non-U.S. clients will continue uninterrupted, a spokesperson for Kraken said.

See:  Canadian Securities Regulators: Crypto Trading Platform Enforcement Coming

Gary Gensler, SEC Chair:

Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors' tokens, need to provide the proper disclosures and safeguards required by our securities laws. Today's action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.

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