Crypto exchange Kraken set to pay $30 million fine to SEC and cease crypto staking service
|- Kraken has been charged with the selling of unregistered crypto staking service program.
- The Securities and Exchange Commission settled the charges by penalizing the exchange for $30 million for four years worth of illegal activities.
- Earlier last month, Gemini and Genesis were also charged similarly for their “Earn” program.
The Securities and Exchange Commission (SEC) has been relentless in its pursuit of crypto companies in the last few months. Under the leadership of Gary Gensler, investigations have resulted in digital asset service providers facing hundreds of millions of dollar worth of fines. The next in line is Kraken.
Kraken taken down by the SEC
The SEC announced in a Thursday press release that they had found Kraken engaging in unlawful conduct. The crypto service provider was charged for selling unregistered services of their cryptocurrency staking as a service program. Kraken was selling this service to its customers under the claim of providing an annual return on investment of around 20%..
In order to bring this to an end, Kraken agreed with the commission to immediately shut down the selling of their crypto-staking services. Along with this, the company also agreed to pay a fine of $30 million in disgorgement, prejudgment interest, and civil penalties. Commenting on the same, SEC Chair Gensler stated,
“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.”
Furthermore, the SEC also noted that through their staking program, Kraken not only offered investors outsized returns untethered to any economic realities but also retained the right to pay them no returns at all.
SEC strikes again
This is the second case in less than a month from the Securities and Exchange Commission charging a company for an unregistered offering. In January 2022, Gemini and Genesis were charged with offering unregistered securities.
Both companies were already fighting their war as Genisis had halted the withdrawal of the users of their “Earn” program. The companies were accused of similar charges as Kraken.
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