Kraken crypto exchange fined US$30 million for violating crypto regulations

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  • On February 9, the US SEC stated that Kraken had failed to register offer and sale of their crypto staking-as-a-service.
  • The Kraken crypto exchange received a $30 million fine for the said illegal services.
  • In December 2022, the exchange had to let go of 30% of its staff to stay afloat.

Kraken is among the top crypto exchange platforms that maintain the entire ecosystem. Unfortunately, its glory days appear to have come to a standstill. The US Securities and Exchange Commission had found Kraken guilty of failing to register the offer and sale of their crypto-staking service. As a result, this top crypto exchange is now forced to pay US$30 million to settle the violation of regulations.

Many are asking whether or not Kraken can maintain its steady lead within the crypto ecosystem. Unfortunately, hope appears bleak since, in 2022, Kraken had to let go of 1100 employees to survive the crypto winter.

Top Crypto Exchange platform found guilty.

Kraken is one of the top crypto exchange platforms alongside Binance and Coinbase. In 2011 this titan of an exchange debuted. It is considered one of the first few crypto exchanges developed before Bitcoin’s Golden rush in 2017.

One of the few aspects that have enabled Kraken to survive for so long is its numerous functionalities and the trust it has built over the years. It contains an improved trading interface that enables veteran crypto traders to access sophisticated tools that assist with trading.

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US SEC forced the Kraken crypto exchange to shut down crypt staking services and fined $30 million as it violates its crypto regulations.[Photo/Medium]
Crypto traders can use these tools to predict slight changes in the incline or decline in crypto volatility. This top crypto exchange platform offers spot and margin trading, portfolio management and, most recently, a crypto staking service. In addition, to cater for beginner crypto traders, Kraken also provides a lesser version of its Pro Kraken. As a result, plenty of new traders often flooded the gates of Kraken. Thus setting up adequate crypto regulation within the system is challenging.

Also, Read SEC warns crypto traders and investors of the looming honey trap.

On February 9th, the US SEC stated that Kraken had failed to register the offer and sale of their crypto staking-as-a-service. The commission claimed this qualified as securities under its purview. Kraken was forced to oblige and has agreed to cease operations of its staking program. In violation of the crypto regulation, this top crypto exchange platform received hefty penalties. It included a $30 million fine in disgorgement, prejudgment interest and civil penalties.

According to SEC’s Division of Enforcement director, Gurbir Grewal, Kraken crypto exchange knew about the actions. He stated that Kraken not only offered investors outsized returns untether to any economic realities but also retained the right to pay them no returns.

This violated set crypto regulations, and US SEC would not stand for it. Their operations have stiffened, especially after FTX collapse, and a crackdown on other crypto exchange platforms was a mandatory step to ensure it does not repeat. Initially, the Kraken crypto exchange stated that its crypto staking services would be an easy-to-use platform and would significantly benefit its efforts on behalf of investors. Many might suspect this was a desperate move from Kraken to stay afloat in the crypto industry.

Is the top crypto exchange platform losing its edge?

Aside from the US SEC imposed fine on the Kraken crypto exchange, it has had a series of outfalls since the FTX crash. Initially, Kraken was not spared in the system’s collapse. Its customers withdrew from its ecosystem, fearing it would follow suit and crash on itself.

This significantly caused damage to the point Kraken had to lay off at least 30% of its staff to stay afloat. The exchange has rendered over 1100 employees jobless. Although a top crypto exchange, Kraken still enforced various policies allowing their former employees some cushioning before finding alternative positions.

Also, Read Kraken lays off 1100 employees following the crypto crash outweigh.

Unfortunately, the Kraken crypto exchange needs more than this. With this significant loss, it might be time for the crypto exchange to close its curtains.

Conclusion

Kraken is slowly losing its stake as a top crypto exchange. After the US SEC dropped the hammer on it, many users are now questioning its other operations. Fortunately, Kaken has stated that it will continue to offer its crypto-staking services to other non-US citizens. Unfortunately, it has yet to alter its policy.

This question is whether the Kraken crypto exchange avoids changing its policy simply because other countries need clearly defined crypto regulations. It’s merely a matter of tie before other states notice this trend and slowly isolate themselves from this top crypto exchange platform. Is this the beginning of the end for the Kraken crypto exchange, or is it a minor setback to its operations?

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Ken Mutuku
Ken Mutuku
I am an enthusiastic writer who believes that facts, knowledge and opinions can be expressed vividly with just a few words. I think that all forms of writing achieve this; hence I have a wide area of expertise and interest, such as cryptocurrency, psychology and the human mind.