Kraken Agrees to Pay $30 Million in SEC Settlement, Crypto Markets Tumble

Kraken, an exchange for cryptocurrency based in the United States, has come to an agreement with the SEC to pay $30 million in restitution, interest, and fines for its involvement in the unregistered offering of staking services.[0] On February 9th, 2023, an announcement was made that Kraken’s U.S.-based staking program would be discontinued, along with other details of the settlement.[0]

Staking, which allows users to earn rewards by using their existing holdings of tokens to verify transactions, is a feature of proof-of-stake blockchains, such as Ethereum.[1] According to SEC Chair Gary Gensler, crypto intermediaries need to provide proper disclosures and safeguards when offering investment contracts, regardless if it’s through staking-as-a-service, lending or other means.[1] “Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection,” Gensler said.[2]

The news sent the cryptocurrency markets tumbling, with Bitcoin falling 3.7% in the past 24 hours to trade below $22,000 Friday, according to CoinMarketCap data, and Ethereum dropping 5.2% to hover above $1,500.[3] Shares of Coinbase (COIN) fell 4% following the news and Coinbase shares dropped 23% so far this week.[4]

Coinbase Chief Legal Officer Paul Grewal also weighed in on the news, claiming that Coinbase’s staking program is not affected by the settlement.[5] “What’s clear from today’s announcement is that Kraken was essentially offering a yield product,” Grewal wrote in a statement shared with The Block.[6] “Coinbase’s staking services are fundamentally different and are not securities.”[6]

Kraken stated in a blog post that it would still offer staking services to non-U.S. customers through a subsidiary, but according to the SEC announcement, the firm is permanently banned from providing staking services to U.S. residents, even if they sought to register it with the regulator.[0]

0. “Kraken Winds Down Staking for US Investors, Pays $30 Million to Settle Unregistered Offering of Staking Services …” Bitcoin News, 9 Feb. 2023,

1. “Kraken settles with SEC for $30M over staking services” Axios, 9 Feb. 2023,

2. “Kraken pays $30 million to settle SEC charges over staking program” Yahoo News, 9 Feb. 2023,

3. “Kraken to stop offering crypto ‘staking’ and pay $30m SEC penalty” Markets Insider, 10 Feb. 2023,

4. “Bitcoin Price Plummets As Crypto Regulation Heats Up; Major Exchange Pays $30 Million SEC Settlement” Investor’s Business Daily, 10 Feb. 2023,

5. “Coinbase Drops Most Since July as SEC Cracks Down on Crypto Staking” Yahoo! Voices, 10 Feb. 2023,

6. “Community urges Coinbase to relist XRP as CEO fights for staking” Cointelegraph, 10 Feb. 2023,