Kraken Agreed SEC Charges & Shut Down its Staking Service

• Kraken was fined $30 million by the SEC.
• Kraken entities agreed to end its on-chain staking services.

Following the regulator’s probe into Kraken, the crypto exchange had agreed to settle charges with U.S. Securities and Exchange Commission (SEC) and shut down its on-chain cryptocurrency staking service. 

The U.S SEC announced on Thursday that, the two Kraken entities ‘Payward Ventures and Payward Trading’ accept to pay $30 million in charges for “disgorgement, prejudgment interest, and civil penalties.” Also, in response to the settlement, the exchange has decided to discontinue offering or selling securities to U.S. customers.

SEC Chair Gary Gensler stated that;

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.

First Slash on Crypto Staking by SEC

Staking is a common service provided at both centralized and decentralized cryptocurrency exchanges. Including leading exchanges in the United States, such as Coinbase and Binance US. 

However, the Kraken settlement signals the SEC’s first crackdown on staking, which may cause issues for platforms with similar services. And the news was released a day after Coinbase CEO Brian Armstrong tweeted that he had heard rumors that the SEC intends to ban crypto staking for users in the United States.

Since 2019, Kraken has offered its staking services for crypto assets to the general public. According to the website, Kraken’s staking service promised to give rewards to users twice a week and offered up to 20% APY.