The cryptocurrency exchange Kraken has reached an agreement with the United States Securities and Exchange Commission to stop offering staking services or programs.
In a February 9 announcement, The SEC said it had accused Kraken of “failing to register the offer and sale of its crypto asset staking program as a service,” which the commission claims qualify as securities under its purview. The cryptocurrency company has agreed to cease operations of its staking program, as well as pay $30 million in restitution, late-payment interest, and civil penalties.
“Kraken not only offered investors exorbitant returns untethered to any economic reality, but also reserved the right not to pay them any returns,” said the director of the SEC Control Division, Gurbir Grewal. “At the same time, he did not provide them with any information, among other things, about his financial situation and whether he even had the means to pay the traded returns.”
Today we charged Kraken with failing to register the offer and sale of their crypto asset staking-as-a-service program, whereby investors transfer crypto assets to Kraken for staking in exchange for advertised annual investment returns of as much as 21 percent.
— US Securities and Exchange Commission (@SECGov) February 9, 2023
Today we accused Kraken of failing to register the offer and sale of its crypto asset staking-as-a-service program, whereby investors transfer crypto assets to Kraken for lockup in exchange for advertised annual investment returns of up to 21%.
The SEC complaint claimed that Kraken had been offering its cryptocurrency staking services to users since 2019, announcing that it is an “easy-to-use platform and benefits derived from Kraken’s efforts on behalf of investors.” However, the commission alleged that Kraken users effectively lost control of their tokens by offering them to the staking program, imparting additional risk and “very little protection.”
The Kraken deal will be subject to court approval before becoming final.
This story is in development and will be updated.
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