Kraken is one of the largest crypto exchanges in the world.
Tiffany Hagler-Geard | Bloomberg via Getty Images
Crypto exchange Kraken will close its US cryptocurrency staking operations and pay a $30 million fine to settle enforcement actions alleging it sold unregistered securities, the Securities and Exchange Commission said Thursday.
SEC claims Kraken failed to register Kraken’s crypto staking-as-a-service offering and sale program.
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Many centralized exchanges like Kraken and Gemini offer customers the option of token shares in order to get the results of digital assets that would otherwise be idle on the platform. With crypto staking, investors typically lock 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 locking in the asset.
Kraken advertised on its website returns of up to 20% annual percentage through staking products. The exchange also promises on its website to deliver these gifts to customers twice a week.
“Whether through staking-as-a-service, lending, or otherwise, crypto intermediaries, when offering investment contracts in exchange for investor tokens, must provide the proper disclosures and protections required by our securities laws,” SEC chairman Gary . Gensler said in a statement.
Kraken neither admitted nor denied 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 revealed that crypto lender Genesis and crypto exchange Gemini were allegedly offering and selling unregistered securities.
Shares of crypto exchanges Coinbase slid sharply on Thursday after CEO Brian Armstrong warned that potential SEC action on retail crypto staking would be a “terrible path.”
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