SEC Fines Kraken $30M for Unregistered Crypto Staking Program
SEC Charges Kraken For Failing to Register Offer and Sale of Crypto Asset Staking Service
- The 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 immediately 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 Information
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. The program allowed investors to transfer crypto assets to Kraken for staking in exchange for advertised annual investment returns. Staking involves locking up crypto tokens with a blockchain validator in exchange for a reward in new tokens.
Kraken Agrees To Cease Offering Or Selling Securities Through Staking Services & Pay Penalty
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.
SEC Chair And Director Of Division Of Enforcement Comment
SEC Chair Gary Gensler commented, “Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.” SEC Director of the Division of Enforcement Gurbir S. Grewal added,”Today, we take another step in protecting retail investors by shutting down this unregistered crypto staking program.”
