Today, Kraken (a major US-based cryptocurrency exchange) posted an update that was also sent directly to its clients. In the email, Kraken confirmed it would end on-chain staking services for U.S. clients. Key takeaways from Kraken’s decision:
- U.S. clients will not be able to stake new assets.
- Previously staked non-ETH assets will be automatically unstaked. These assets will be returned to the client’s spot wallet and will no longer earn rewards.
- Kraken will prorate final rewards through February 9. These rewards will not become staked. Kraken will instead pay rewards out in their non-staked form.
- All staked ETH will become unstaked after the Shanghai upgrade and will continue to earn rewards until then. There are no changes to the payout structure until after the Shanghai upgrade, when ETH will be unstaked.
Note that Staking services for non-U.S. clients will continue uninterrupted. Non-U.S. clients can continue to stake and unstake assets, as well as automatically earn and stake rewards, as usual. In addition:
- The probe is at an “advanced stage” and “could lead to a settlement in coming days.”
- The investigation pertains to certain offerings that Kraken has made to U.S. clients.
As per reports, crypto exchange Kraken is facing investigation by the United States Securities and Exchange Commission(SEC) over alleged securities violations. According to a Bloomberg report, the probe is at an “advanced stage” and “could lead to a settlement in coming days.”The report states that the SEC investigation pertains to certain offerings that the exchange has made to U.S.-based clients.
In September 2022, Kraken’s new CEO Dave Ripley stated that he has no plans to register the company with the SEC or delist any tokens that have been labeled by the SEC as securities.
This is, however, not the first time Kraken has come under regulatory scrutiny. In November, Kraken made a settlement with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), agreeing to pay $362,158.70 for apparent violations of sanctions against Iran.OFAC had then alleged that Kraken failed to exercise due caution or care for its sanctions compliance obligations when knowing the exchange had customers worldwide.
In 2021, the Commodity Futures Trading Commission (CFTC) ordered Kraken to pay $1.25 million in penalties for “illegally offering margined retail commodity transactions in digital assets,” including BTC, and failing to register as a futures commission merchant.
The latest move by SEC comes as part of its larger efforts to tackle wrongdoings in the crypto sector. Last year, the SEC launched an investigation into Coinbase for alleged trading of unregistered securities.
In January, SEC accused Genesis and Gemini of offering unregistered securities. Last year, SEC also brought a record number of crypto-related enforcement actions majority against ICOs, up 50% as compared to 2021.
In December, SEC Chair Gary Gensler had emphasized the agency would enforce securities laws already in place, adding that the SEC has taken 100 enforcement actions in total against crypto firms. Earlier this week, SEC stated that crypto assets are often unregistered securities being traded on unregistered exchanges while also warning that people should be wary of crypto in individual retirement accounts.
