Gary Gensler and the Securities and Exchange Commission (SEC) have accused Kraken, a prominent cryptocurrency exchange, of violating securities laws. In response, Kraken has agreed to pay a $30 million fine and has reached a permanent agreement to cease its staking services in the United States, which has been met with disappointment from the cryptocurrency community.
Following the resolution of the issue, Kraken CEO Jesse Powell has expressed regret over the settlement and acknowledges that the outcome might have been prevented if he had acted differently.
Powell Speaks Out
During an interview with CNBC, Gensler revealed that Kraken was offering returns on cryptocurrency tokens to its customers, ranging from 4% to 21%. Unfortunately, the exchange allegedly failed to warn its customers of the potential risks they faced.
Gensler suggested that Kraken was aware of the registration process, which involves completing a form on the SEC’s official website for full transparency to investors.
Jesse Powell responded to these allegations, stating that all he had to do was fill out a form on a website to inform others that staking benefits were provided through staking. He regrets not having taken this step before being forced to pay a $30 million fine.
Earlier, Powell had said:
“I honestly hope that somebody proves, in court, that there is a legal, user-friendly version of custodial staking that can be offered to US consumers…It’ll be a brutal, lengthy, expensive fight … but the industry and the USA will be extremely grateful.”
The CEO of Kraken said that his company did not take on the SEC due to the low expected return of a court battle. He added that the SEC singled out Kraken during a bear market when it had to lay off 30% of its workforce because the agency knew it lacked the capacity to fight back.
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Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.