Kraken will pay the SEC $30M in settlement fines, and the company will "immediately" end its crypto staking-as-a-service platform.
The SEC charged the company with selling unregistered securities to U.S. customers, violating federal securities laws.
- Kraken will unstake any assets staked by U.S.-based users except for staked Ether.
- Ether staking will end when Ethereum Network's Shanghai upgrade is completed.
- Note: This only affects U.S.-based clients.
- Kraken claims investors can get a 20% yield on its staking services; the SEC argues that the firm was offering 21%.
- Staking is the process by which proof-of-stake blockchain networks maintain security.
- Benefits:
Staking crypto increases the blockchain's resistance to attacks and
hacks, increasing transaction speed. Every time you stake crypto, you
add another layer of protection to the network.
- It offers users
a way of earning interest or "rewards" for holding certain types of
cryptocurrency and placing them in a smart contract, like Tezos, Cosmos,
or even Ethereum 2.0 once it launches.
- In other words, think of staking as depositing currency to a bank account and accumulating interest.
- When you stake crypto, you put it up as collateral to help validate transactions.
- The network's decentralized validators post crypto as a form of collateral.
- They receive more tokens as a reward for remaining honest.
- Note: not all tokens can be staked; only cryptocurrencies that use a Proof-of-Stake (PoS) algorithm can be staked.
