Crypto: SEC’s Gensler puts heat on crypto staking as Kraken pays $30 million fine

by | Feb 9, 2023 | Stock Market

Kraken, one of the largest crypto exchanges on the market, will be paying $30 million to settle charges brought on by the US Securities and Exchange Commission, according to a press release from the SEC on Thursday afternoon. The charges are for failing to “register the offer and sale of their crypto asset staking-as-a-service program,” where investors use their crypto assets on Kraken in exchange for an annual investment return as much as 21 percent. To settle the charges, two Kraken entities agreed to immediately stop offering and selling securities through crypto asset staking services or programs, and pay the fine.

Crypto staking, which is a way for crypto investors to make a passive income on their investments by locking up or “staking” their tokens with a blockchain validator, got a lot of attention on Wednesday evening, when Coinbase CEO Brian Armstrong said a ban on staking would be a “terrible path” for the industry. The complaint from the SEC alleges that Kraken touts that its staking program offers an easy platform and benefits for investors, when in reality they lose control of those tokens and take on risks associated with Kraken with very little protection. On Wednesday evening, a report from Bloomberg said that the SEC was investigating the exchange. “Whether it’s through staking-as-a-service, lending, or other means, crypto intermediar …

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