Shortly after Kraken was charged by the Securities and Exchange Commission for unregistered offerings of its staking services, Bitcoin dropped to $22,000 again on Thursday
Kraken agreed not to admit or deny any wrongdoing and to stop the service.
- According to the SEC Press releaseKraken’s Staking Service was a securities sale because it allowed users to hand over their cryptocurrency in return for a promise of return.
- “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,” said SEC Chair Gary Gensler.
- Gensler’s chairman stated that all other staking platforms should register and disclose any potential risks. Gensler previously argued Proof of stake cryptos may be considered securities.
- Gurbir S. Grewal is the Director of the SEC’s Division of Enforcement. He stated that the shutdown will “protect investors” from Kraken’s service. It offered returns “untethered” to economic realities and maintained the right to pay no interest.
- Staking-as a service involves pooling crypto assets to be staked on proof-ofstake cryptocurrency networks such as Ethereum and Solana. The currency staked will determine the return, but some advertise as much as 21%.
- Brian Armstrong, CEO of Coinbase – which also offers staking as a service Beware The SEC had announced that it was planning to take enforcement action against similar products on Wednesday night. He claimed that staking services are not securities and offer industry benefits such as increased security, scaleability, and a reduced carbon footprint.
- He said, “We must ensure that new technologies are encouraged and supported to grow in the US, rather than stifled or obstructed by lack of clear guidelines.”
- Bitcoin was trading at $22,950 less than 24 hours ago. However, it fell sharply to $21,791 after Thursday’s announcement. Ether is down 6%, falling from $1648 up to $1548.