SEC CRACKED KRAKEN

Overview

- 30 Million USD fine & Ceases Staking service

- On-Chain data

- Issue with Staking Yields

30 Million Settlement

Kraken was forced to pay a fine of 30 Million USD to the SEC. Moreover, their overall crypto staking program was forced into closure.

On-Chain data

1.2 MILLION ETH READY TO BE UNLOCKED POST-SHANGHAI UPGRADE

This is a huge blow to the Ethereum community as the SEC ceases Kraken from offering staking program as a service. Kraken being the 3rd Largest CEX to offer staking service directly influences the price of Ether.

KRAKEN's Influence as a CEX on Ethereum

Kraken houses 38578 Ethereum Validators.

Total active validators = 517418

That is approximately 7.45% of the entire active validators on the beacon chain.

Total Staked Eth amount = ± 1.2 Million ETH

Current ETH price @11.25pm = 1557.07 USD

1.8 Billion USD worth of Ether ready to be unlocked.

Source: https://crypto.news/1-2m-eth-staked-on-kraken-to-be-unlocked-after-shanghai-upgrade/

SEC issue with Staking yields

The promise of staking returns (yields) was not tied to any real economic realities. Kraken offers its customers a staking service where it locks up customers' crypto assets and promises return (yield) as interest for locking up their assets for a specific period of time. Further evidence depicts that Kraken did not make proper disclosure regarding the returns to the customers. The SEC was skeptical about Kraken's financial situation. The lack of disclosure on the financial side made the SEC question the means of Kraken delivering the promise of returns it made to its customers. The lack of consumer protection on the staking program made it easier for SEC to crack down Kraken, as they even retained the right to not pay returns at all.

Source: https://www.theverge.com/2023/2/9/23593183/kraken-staking-sec-settlement-penalties-crypto-interest