The Securities and Exchange Commission (SEC) accused Kraken of not registering its crypto asset staking program as a service.
The Securities and Exchange Commission (SEC) has charged Payward Ventures, Inc. and Payward Trading Ltd., commonly known as Kraken, with failing to register the offering and selling of their crypto asset staking program as a service. The program allowed investors to transfer crypto assets to Kraken for staking in exchange for advertised annual investment returns.
According to The SEC Complaint, Kraken has been offering and selling its staking services since 2019, aggregating certain crypto assets transferred by investors and staking them on behalf of the investors. Staking involves locking crypto tokens with a blockchain validator in exchange for a reward in the form of new tokens.
Kraken agreed to immediately cease offering or selling securities through the staking services and to pay $30 million in refunds, prejudgment interest and civil penalties. Additionally, Payward Ventures and Payward Trading, without admitting or denying the allegations, have consented to the entry of final judgment that would permanently bar them from violating the Securities Act of 1933.
SEC Chairman Gary Gensler said, “Today’s action should send a clear signal to the market that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection. SEC Enforcement Division Director Gurbir S. Grewal added, “Today we are taking another step in protecting retail investors by shutting down this unreliable crypto staking program. checked in.”
The SEC complaint also alleges that Kraken asserted that its staking investment program offered benefits and easy-to-use strategies to achieve steady investment returns, but failed to provide investors with insight into its financial status, among other things. . The survey was conducted by Laura D’Allaird and Elizabeth Goody, under the supervision of Paul Kim, Jorge G. Tenreiro and David Hirsch, with assistance from Sachin Verma, Eugene Hansen and James Connor.