Kraken Settles With SEC For $30 Million, Agrees To Shutter Crypto-Staking Operation
According to CoinDesk, Kraken has agreed to shut its cryptocurrency-staking operations to settle charges with the U.S. Securities and Exchange Commission (SEC). From the report: The SEC will discuss and vote on the settlement during a closed-door commissioner meeting on Thursday afternoon, and an announcement may come later in the day, the industry person told CoinDesk. Kraken offers a number of services under its staking umbrella, including a crypto-lending product offering up to 24% yield. This is also expected to shut down under the settlement, the industry person said. Kraken's staking service offered a 20% APY, promising to send customers staking rewards twice per week, according to its website. Bloomberg reported that Kraken was close to a settlement with the SEC over offering unregistered securities on Wednesday. SEC Chair Gary Gensler has previously said he believes staking through intermediaries -- like Kraken -- may meet the requirements of the Howey Test, a decades-old U.S. Supreme Court case commonly used as one measure of whether something can be defined as a security under U.S. laws. Staking looks similar to lending, Gensler said at the time. The SEC has brought and settled charges with lending companies before, such as now-bankrupt lender BlockFi. A Kraken settlement would help Gensler's mission, giving his agency a big win as it continues its efforts to police the broader crypto ecosystem. The majority of people staking on Ethereum, for example, use services, according to Dune Analytics. CNBC reports that the crypto exchange has also agreed to "pay a $30 million fine to settle an enforcement action alleging it sold unregistered securities." "The SEC claims Kraken failed to register the offer and sale of its crypto staking-as-a-service program. U.S. investors had crypto assets worth over $2.7 billion on Kraken's platform, the SEC alleged, earning Kraken around $147 million in revenue, according to the SEC complaint (PDF)." The SEC announced the charges in a press release.
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