Kraken to end staking in $30M SEC settlement

Feb. 9, 2023 at 9:40 pm

By Mike Dalton

The firm will pay a large penalty and face a permanent injunction.

Crypto exchange Kraken will discontinue its staking services as part of a settlement with the SEC, according to a press release from the regulator on Feb. 9.

There, the U.S. Securities and Exchange Commission charged Kraken with failing to register its cryptocurrency staking service as a security offering.

The regulator said that Kraken had offered its staking service to the general public since 2019. Users were able to deposit their crypto holdings with the program, and Kraken advertised rewards as high as 21% for those who participated in the offer.

The SEC alleged that participants lose control of their assets and take on risk “with very little protection” when using Kraken’s staking service. It also complained that Kraken determines user rewards separately from the staking mechanism of the underlying blockchains — and as a result, does not sufficiently disclose to users how it determines rewards.

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