US-based cryptocurrency exchange Kraken has received a USD 30 million fine from the Securities and Exchange Commission for violating securities laws. Kraken has agreed to pay the fine and completely halt its crypto staking service for US residents.

The SEC revealed in a statement that the firm had failed to register the offer and sale of its crypto asset staking-as-a-service program, which has led to the fine. Kraken, which consists of Payward Ventures Inc and Payward Trading Ltd has neither confirmed nor denied the SEC’s allegations but revealed that they will still provide staking services for non-US residents through a Kraken subsidiary. According to decrypt.

co citing data from CoinGecko, Kraken is the fourth largest crypto exchange by daily volume. The company’s customers can buy and sell cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin. According to the SEC’s complaint, since 2019, Kraken has offered and sold its crypto asset staking service to the general public.

The service allows Kraken to pool certain crypto assets transferred by investors and stake them on behalf of those investors. This isn’t the first time Kraken has come under fire. In November 2022, the company had to pay the US Treasury Department’s Office of Foreign Assets Control USD 362,158 for apparent violations of sanctions against Iran.

At the time, Kraken officials cited by decrypt. co revealed that the matter was voluntarily self-reported and corrected in a timely manner. More information about crypto staking Cryptocurrency staking is only supported by cryptocurrencies that use a consensus mechanism named Proof of Stake in order to ensure that all transactions are verified and secured without the need for a bank or payment processor.

Users who stake their cryptocurrencies allow them to become part of this verification process. Cryptocurrencies such as Ethereum and Solana use staking as part of their consensus mechanisms. However, Bitcoin does not allow staking because it still relies on a Proof of Work consensus mechanism.

There are certain risks associated with staking, and according to the SEC, when investors provide tokens to staking-as-a-service providers, they lose control of those tokens and take on risks associated with those platforms, with very little protection. In light of these risks, users receive financial benefits in the form of a percentage-rate reward over time. The level of risk depends on several factors, such as the security of the staking platform or wallet being used, the risk of hacking, and the security of the blockchain network.

.