SEC Releases the Kraken…Settlement

Yesterday, the Securities and Exchange Commission (“SEC”) announced a settlement with centralized crypto exchange Kraken over its “staking‐​as‐​a‐​service program.” The service allowed users to earn rewards by indirectly participating in a process that helps to maintain and secure certain cryptocurrency networks. The SEC alleged that Kraken’s staking service constituted the illegal offer and sale of unregistered securities.In essence, the SEC’s complaint contains two main allegations: one, that Kraken’s staking service involved the offer and sale of a type of security known as an investment contract, and two, that Kraken failed to register this security by filing a statement containing certain material information, as required under the Securities Act of 1933 and its implementing regulations.