Last updated February 13, 2023
Gary Gensler claimed that Kraken was aware of the risks associated with offering cryptocurrencies but still failed to disclose them to customers and register with the SEC body.
Three days ago, the United States Securities and Exchange Commission (SEC) announced that the agency fined the Kraken exchange over unregistered securities offerings. Instead of going to court to fight such a significant enforcement action, Kraken settled the case with a $30 million fine. The settlement of the case by the Kraken exchange was indeed strange as Kraken made the decision quickly without any prior disclosure in the crypto sphere. Many legal experts asked why Kraken settled the case to protect its purported crypto-staking services, which were not securities.
Recently SEC agency chairman Gary Gensler appeared in an interview with CNBC. In the interview, Gary explained why the SEC slammed the Kraken exchange over staking services.
Gary pointed out that the Kraken exchange failed to disclose the risks associated with Kraken’s crypto staking services and that Kraken was aware of the risks but still failed to register with the SEC to provide staking services under the Securities Act. Stayed.
In short, the SEC chairman claimed that Kraken’s crypto staking service was more likely to receive a program with a claim of zero% risk but in fact, the risk was likely.
Kraken co-founder Jesse Powell responded to that interview with Gary Gensler, saying he made a mistake and shouldn’t have to pay the $30 million fine.
Oh man, all I had to do was fill out a form on a website and tell people that staking rewards come from staking? I wish I had seen this video before agreeing to pay the $30m fine and permanently shut down service in the US. I look so dumb God. ⛽️💡https://t.co/UPdQdnI6xN
— Jesse Powell (@jespow) February 10, 2023
Powell noted that he made the decision quickly and blindly but at the same time noted that the Kraken exchange is not in a good position due to the bear market situation, so Kraken cannot fight against the SEC.
Cardano founder Charles Hawkinson also shared his opinion on Kraken’s crypto staking service and noted that the SEC enforcement action on Kraken exchange was only due to the crypto staking model falling under security offerings.
Hoskinson also indirectly claimed that if his opinion on Kraken’s crypto staking services is not correct, the SEC may consider all types of crypto staking services under the same category rule.
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