Kraken to Discontinue Unregistered Offer and Sale of Crypto Asset Staking-As-A-Service Program and Pay $30 Million to Settle SEC Charges.
The U.S. Securities and Exchange Commission (SEC) accused Kraken of selling and offering a staking-as-a-service programme for digital assets without being registered.
Payward Ventures, Inc. and Payward Trading Ltd. were accused by the U.S. Securities and Exchange Commission (SEC) yesterday (both known as Kraken). The complaints claim that Kraken promoted and sold a staking-as-a-service scheme for digital assets without registering. Companies tout the possibility of up to 21% annual profits for investors.
Both Kraken-affiliated businesses also agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties. They also agreed to immediately stop providing or selling securities through crypto asset staking or staking services.
The SEC’s complaint claims that Kraken has been offering “staking services” for crypto assets to the general public since 2019. The business pools the cryptocurrency holdings of investors and bets them on behalf of its clients. Staking describes the process by which investors secure crypto tokens using a blockchain validator and then get fresh tokens after the invested tokens are used to verify blockchain data. Customers run the danger of losing control of their funds with no security when they transfer tokens to Kraken.
“Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries need to provide the right disclosures and safeguards needed by our securities laws when selling investment contracts in exchange for investors’ tokens,” said Gary Gensler, chair of the SEC. The market should now be aware that staking-as-a-service providers are required to register and offer complete, fair, and true disclosure as well as investor protection as a result of today’s move.
Payward Ventures, Inc. and Payward Trading Ltd. may be permanently barred from issuing or selling securities through crypto asset staking programmes or staking services, if the court upholds the decision.