Kraken Settles With SEC For $30 Million, Agrees To Shutter Crypto-Staking Operation (coindesk.com) 18
According to CoinDesk, Kraken has agreed to shut its cryptocurrency-staking operations to settle charges with the U.S. Securities and Exchange Commission (SEC). From the report: The SEC will discuss and vote on the settlement during a closed-door commissioner meeting on Thursday afternoon, and an announcement may come later in the day, the industry person told CoinDesk. Kraken offers a number of services under its staking umbrella, including a crypto-lending product offering up to 24% yield. This is also expected to shut down under the settlement, the industry person said. Kraken's staking service offered a 20% APY, promising to send customers staking rewards twice per week, according to its website. Bloomberg reported that Kraken was close to a settlement with the SEC over offering unregistered securities on Wednesday.
SEC Chair Gary Gensler has previously said he believes staking through intermediaries -- like Kraken -- may meet the requirements of the Howey Test, a decades-old U.S. Supreme Court case commonly used as one measure of whether something can be defined as a security under U.S. laws. Staking looks similar to lending, Gensler said at the time. The SEC has brought and settled charges with lending companies before, such as now-bankrupt lender BlockFi. A Kraken settlement would help Gensler's mission, giving his agency a big win as it continues its efforts to police the broader crypto ecosystem. The majority of people staking on Ethereum, for example, use services, according to Dune Analytics. CNBC reports that the crypto exchange has also agreed to "pay a $30 million fine to settle an enforcement action alleging it sold unregistered securities."
"The SEC claims Kraken failed to register the offer and sale of its crypto staking-as-a-service program. U.S. investors had crypto assets worth over $2.7 billion on Kraken's platform, the SEC alleged, earning Kraken around $147 million in revenue, according to the SEC complaint (PDF)." The SEC announced the charges in a press release.
SEC Chair Gary Gensler has previously said he believes staking through intermediaries -- like Kraken -- may meet the requirements of the Howey Test, a decades-old U.S. Supreme Court case commonly used as one measure of whether something can be defined as a security under U.S. laws. Staking looks similar to lending, Gensler said at the time. The SEC has brought and settled charges with lending companies before, such as now-bankrupt lender BlockFi. A Kraken settlement would help Gensler's mission, giving his agency a big win as it continues its efforts to police the broader crypto ecosystem. The majority of people staking on Ethereum, for example, use services, according to Dune Analytics. CNBC reports that the crypto exchange has also agreed to "pay a $30 million fine to settle an enforcement action alleging it sold unregistered securities."
"The SEC claims Kraken failed to register the offer and sale of its crypto staking-as-a-service program. U.S. investors had crypto assets worth over $2.7 billion on Kraken's platform, the SEC alleged, earning Kraken around $147 million in revenue, according to the SEC complaint (PDF)." The SEC announced the charges in a press release.
Huh. (Score:3)
Didn't know a rum company got so invested in CryptoBS. Think I'll stick to Capt. Morgan from now on.
So the Kraken has been released, then? (Score:2)
Ba-dum-bump (Score:3)
The SEC put a stake in that.
Wrong monster (Score:2)
No one is using crypto anymore (Score:2)
The SEC has it wrong (Score:3, Interesting)
but nevertheless, cryptocurrency is still a dumpster fire.
Prior to PoS, it was very common to do pooled proof-of-work mining. The way it works is that a bunch of miners would all connect their rigs to a single mining pool, and when that pool found a block and earned the mining reward, the resulting coins would be shared proportionally (based on how much hashrate each miner contributed) amongst the miners in the pool.
Pooled staking is essentially no different than pooled mining, except instead of buying a room full of mining rigs and paying for electricity (or stealing it, you never know), PoS allows you to go directly from "fat pile of real cash" to "I'm now earning magic internet money, yay!" But somehow, to the SEC, participating in pooled proof-of-staking is a security, rather than what is simply a less wasteful (both energy and resulting e-waste) method of mining.
If the government is just against cryptocurrency (and there certainly are some legitimate reasons), it would be nice if they'd drop the disingenuous act and just come right out and say it.
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insanely creative & risky
Otherwise, known as a scam.
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Otherwise, known as a scam.
I can't believe I'm saying this, but pooled staking is no more risky than any other situation where you have an exchange holding on to your cryptocurrency. You run the risk of your assets losing value, and the risk that the entity holding your crypto runs off in the night with your funds.
If all goes well, as time goes on you'll end up with increasingly more cryptocurrency than your initial "investment" as a basic function of the blockchain network's normal operations. That part isn't a scam. However, dep
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You lost me at 'fat pile of real cash'
What I was implying is that you don't need anything beyond money to buy directly into a proof-of-stake mining scheme (yes, by purchasing the coins). Contrast with Proof of Work mining, where you'll need mining hardware, electricity, and the know-how to get it all working.
it is a held security.
Staked cryptocurrency is cryptocurrency set to staked status in a wallet, which entitles the stakeholder to mining/transaction fee rewards, the same operating mining hardware. Nothing analogous exists in traditional stock investing, becau
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Have you never heard of DRIP? (Dividend ReInvestment Plan) - hell some stocks even give you additional stock instead of a cash dividend unless you actually ask for it in cash.
They are just reinventing the wheel with different lingo.
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Staked cryptocurrency rewards aren't the same as your broker using your dividends to purchase more stock for you at current market rates. There is no purchasing of additional cryptocurrency involved. The staked wallet itself is rewarded as part of normal blockchain network operation, and the pool simply divides up that reward in proportion with the amount of cryptocurrency you've put up as a stake.
While it may certainly appear superficially similar to receiving stock dividends, the important distinction i
What does the ... (Score:2)
Huh, I must be drunk (Score:2)
I first read the title as "Karen settles with SEC..."
Then I read TFS and the first line, to me, was "According to CoinDesk, Karen has agreed..."
Starting to wonder who is this Karen lady... then I realized it was KRAKEN all along.
Well, I'll wait. An article about a Karen will come up eventually, I can feel it.
They paid the fine. (Score:2)
So the penitentiary was asked to release the kraken.
in totally unrelated news (Score:2)
A criminal settled with police for $1.50 (0.0015% of his massively inflated "estimated" net worth) and agreed to refrain from committing one very specific and narrowly defined crime in future.
The ex-criminal is now regarded as a model citizen of unimpeachable virtue - at least until the next time he gets caught doing something slightly different.
Weird company (Score:2)
LinkedIn sent me some spam for a job position in Kraken so I looked it up out of curiosity and it was bonkers. The CEO posted an online screed that seemed mostly about his right to talk shit and insult people and that everyone there should be crypto zealots. So basically be a crypto-pushing libertarian asshole and you'll fit right in with the rest - up until they lay people off, in which case you'll be an unemployed crypto-pushing libertarian asshole.