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Kraken crypto exchange to shut down staking program following $30 million SEC settlement

The Securities and Exchange Commission alleged that Kraken sold unregistered securities and failed to register offer and sale of its crypto staking-as-a-service program.

TJ Denzer

February 9, 2023 4:00 PM

Image via Kraken

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Another major hit to the cryptocurrency sector is taking an exchange entirely out of the game. The US Securities and Exchange Commission (SEC) has reached a settlement with the Kraken cryptocurrency exchange to the tune of $30 million USD. The settlement will shutter Kraken’s crypto staking-as-a-service program in the United States.

The results of this settlement were shared in a statement from the SEC on February 9, 2023, as reported by CNBC. The SEC alleged that Kraken sold unregistered securities and failed to properly register the offer and sale of its crypto staking-as-a-service program. Exchances like Kraken offer customers the option to stake tokens in order to earn a yield from their assets. Normally, investors will vault their assets with a blockchain validator, verifying the accuracy of transactions through said blockchain. Then, investors can earn additional crypto tokens by keeping those assets tucked away.

According to the SEC, investors in the United States has $2.7 billion USD worth of assets tied up in Kraken’s platform, earning the company around $147 million in revenue. Around 135,000 of Kraken’s unique users were active in its staking-as-a-service program.

SEC Chairman Gary Gensler went on to say that Kraken’s failure to disclose and properly register its program with the government while operating in US territory is where it crossed a line.

“Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, [companies must] provide the proper disclosures and safeguards required by our securities laws,” Gensler said in a statement.

Cryptocurrency as a whole has had a rough time of it recently. Between the collapse of the FTX crypto exchange platform and, most recently, the shutdown of an argument that NFTs fall under protected speech, the situation shows little sign of improving anytime soon. Stay tuned as we continue to cover further cryptocurrency news.

TJ Denzer

Senior News Editor

TJ Denzer is a player and writer with a passion for games that has dominated a lifetime. He found his way to the Shacknews roster in late 2019 and has worked his way to Senior News Editor since. Between news coverage, he also aides notably in livestream projects like the indie game-focused Indie-licious, the Shacknews Stimulus Games, and the Shacknews Dump. You can reach him at tj.denzer@shacknews.com and also find him on Twitter @JohnnyChugs.