Kraken Winds-Up Crypto Staking Services in The US After $30 Million SEC Settlement

Kraken Crypto Staking Services Suspended After $30 Million Settlement

The settlement with Kraken's two operating companies, Payward Ventures, Inc. and Payward Trading Ltd., was announced on Thursday as the US regulator accused the exchange of not having registered its staking-as-a-service program.

For locking cryptocurrencies with a blockchain validator, crypto holders receive rewards. Staked token holders gain access to rewards in newly mined cryptocurrencies, but they lose control of the tokens they originally held until they are staked.

The SEC claimed that Kraken began offering staking-as-a-service in 2019 and advertised annual investment returns of up to 21%. However, the returns only show a 20% increase, according to Kraken's website.

Services Terminated Only for US Clients

Kraken confirmed in a blog post that it will immediately end its on-chain staking services for US clients and will unstake all assets belonging to US clients enrolled in the program. However, it will currently distribute rewards but will unstake staked Ether following the forthcoming Shanghai upgrade.

The cryptocurrency exchange also specified that it would keep providing non-US clients with staking services via a different subsidiary. A day after media reports revealed an ongoing regulatory investigation against the exchange for offering unregistered securities, the SEC and Kraken reached a settlement.

Kraken, on the other hand, is dealing with the effects of the ongoing "crypto winter." The exchange recently shut down its Japan operations and reduced its workforce by 30%.