SEC regulations are getting the better side of Kraken exchange as the crypto firm is expected to make more settlements in the future despite settling with SEC this February. Kraken exchange is often known for its compliance-inclined behavior, as they paid about $30 million to the SEC to stop any legal war over staking issues.
Earlier this month, on the 9th of February, Kraken (Payward Ventures) and the United States Securities and Exchange Commission announced a settlement between each other as the Kraken exchange tried to avoid legal trouble with them.
The primary basis of the settlement was that the exchange would stop offering staking services to their US customers.
On Twitter, they announced, “Today we charged Kraken with failing to register the offer and sale of their crypto-asset staking-as-a-service program, whereby investors transfer crypto assets to Kraken for staking in exchange for exchange for advertised annual investment returns of as much as 21 percent.”
” Kraken not only offered investors outsized returns untethered to any economic realities but also retained the right to pay them no returns at all. All the while, it provided them zero insight into, among other things, its financial condition. Whether it even had the means of paying the marketed returns in the first place,” SEC’s Division of Enforcement director, Gurbir Grewal, added.
SEC Battles Not Over with Kraken
SEC has warned that despite settling with Kraken over their staking services, their battle with them is not yet over. SEC said that despite the crypto firm paying them about $30 million, they are still not a legal institution in the US and will continue to hunt them down.
While speaking about the situation, SEC Chairman Gary Gensler said that most crypto firms offering staking services don’t usually educate their customers before offering them. He also mentioned that those crypto firms have to meet up with their securities law if they want to avoid SEC regulations.
“Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, need to provide the proper disclosures and safeguards required by our securities laws,” Gensler added. With what Gary Gensler and other SEC executives are saying, it almost seems that SEC pressures on the Kraken exchange are bully-like and not regulatory.
Many Disagree with SEC
Not many people agree with the SEC verdict as they believe that SEC has been using their powers to harass several crypto firms and make them do things that are deemed unnecessary. The latest settlement that required Kraken to pay a whopping $30 million for virtually nothing sent shockwaves through the crypto industry.
Many believe that the SEC is using their powers to make crypto exchanges pay unnecessary fees. They say that the method the SEC uses to fight against crypto firms in the industry is becoming barbaric.
“Settlements are not law. They’re a decision that the economics of settling is better than fighting, no more. The SEC thinks staking-as-a-service is a security. Kraken didn’t admit or deny either way.
It may be a tough question, but the SEC hasn’t answered it, either way, today,” Jake Chervincy said on Twitter.
On the other side, many crypto firms are waiting to see how things finally play out between the SEC and Kraken exchange.