SEC Charges Kraken For Unregistered Crypto Staking Program
- The Securities and Exchange Commission (SEC) has charged Payward Ventures, Inc. and Payward Trading Ltd., commonly known as Kraken, for failing to register the offer and sale of their crypto asset staking-as-a-service program.
- Kraken has agreed to cease offering or selling securities through the staking services and pay $30 million in disgorgement, prejudgment interest and civil penalties.
- The SEC’s complaint also alleges that Kraken claimed its staking investment program offered easy-to-use benefits and strategies to obtain regular investment returns, but provided investors with zero insight into its financial condition.
Background on Crypto Staking
Crypto staking is a process where investors transfer crypto assets to a blockchain validator in exchange for a reward in new tokens. Kraken had been offering this service since 2019, pooling certain crypto assets transferred by investors and staking them on behalf of the investors.
Kraken Agrees To Cease Offering Unregistered Securities
In response to the SEC’s charges, Kraken has agreed to immediately cease offering or selling securities through the staking services and pay $30 million in disgorgement, prejudgment interest and civil penalties. In addition, Payward Ventures and Payward Trading have consented to the entry of a final judgment that would permanently enjoin them from violating the Securities Act of 1933.
“Staking-as-a-Service” Providers Must Register With The SEC
SEC Chair Gary Gensler commented that today’s action should make clear to the marketplace that “staking-as-a-service” providers must register with the SEC in order provide full disclosure and investor protection. This includes providing complete transparency into their financial condition.