Kraken is one of the largest crypto exchanges in the world.
Tiffany Hagler-Geard | Bloomberg via Getty Images
Crypto exchange Kraken will shut down its US cryptocurrency staking operations and pay a $30 million fine to settle an enforcement action, the Securities and Exchange Commission said on Thursday.
The SEC alleged that Kraken failed to register the offer and sale of Kraken’s crypto staking-as-a-service program.
Several centralized exchanges such as Kraken and Gemini offer customers the option of staking their tokens to earn a yield on their digital assets that would otherwise sit idle on the platform. With crypto staking, investors typically vault their crypto assets with a blockchain validator, which verifies the accuracy of transactions on the blockchain. Investors can receive additional crypto tokens as a reward for closing those assets.
Kraken advertised on its website Returns of 20% Annual Percentage Yield Through its staking product. The exchange also promised on its website to distribute those rewards to customers twice per week.
“Whether through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investors investment contracts in exchange for tokens, are required to provide the appropriate disclosures and safeguards required by our securities laws. required,” SEC Chairman Gary Gensler said in a statement.
Kraken did not acknowledge or deny the allegations made in the SEC complaint.
This is the latest in a series of SEC actions targeting the crypto industry and comes just weeks after the SEC alleged that crypto lender Genesis and crypto exchange Gemini allegedly offered and sold unregistered securities.
crypto exchange shares coinbase On Thursday, CEO Brian Armstrong warned that potential SEC action into retail crypto staking would be a “terrible road forward.”
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