The Securities and Exchange Commission (SEC), on February 9th 2023 issues a Press Release. SEC charged two entities of Kraken – Payward Ventures Inc. & Payward Trading Ltd., with failing to register their staking-as-a service program in which investors transfer crypto assets for as much as 21% annual return rate.
To settle the charges against them, both companies agreed to cease offering or selling securities through this particular service and have collectively paid $30 million dollars in prejudgment interest & civil penalties. Since 2019 these services were offered openly without proper registration from any authority resulting into SEC’s indictment today!
In 2023, the SEC filed a complaint against Kraken Exchange for offering and selling its risky crypto asset staking services without providing adequate protection to investors. This process involves locking up – or “staking” – their tokens with blockchain validators in order to be rewarded with new tokens when they become part of the data validation system.
Despite purported statements from Kraken lauding the safety associated with this program, ultimately those investing have little guarantees regarding potential rewards and can end up losing control of their assets entirely.
SEC Chair Gary Gensler has warned crypto intermediaries that they need to provide proper disclosures and safeguards when offering investment contracts. He stated the action is meant to clarify staking-as-a-service providers must register with the marketplace in order for investors’ tokens to be protected under securities laws.
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