Quick answer: On February 9, 2023, the U.S. Securities and Exchange Commission charged Kraken (operated by Payward Ventures and Payward Trading) over its crypto staking-as-a-service program. The SEC alleged the program was an unregistered offer and sale of securities. Kraken settled without admitting or denying the findings, agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties, and stopped offering the staking service to U.S. customers. The video below is Jake Claver’s take on the action; the explainer here lays out the verified facts.
Watch Jake Claver’s full YouTube breakdown on his take on the SEC action regarding Kraken
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By Jake Claver. Educational content, not investment advice.
What the SEC actually alleged
The action centered on staking-as-a-service. Through Kraken’s program, customers transferred crypto assets to the platform, which pooled and staked them and paid customers a share of the rewards, at times advertised as annual returns of up to 21%. The SEC’s position was that this arrangement met the elements of an investment contract under the Howey test: customers invested assets with an expectation of returns derived from Kraken’s efforts. Because the offering was not registered and no exemption applied, the SEC treated it as an unregistered securities offering. The agency also said Kraken did not adequately disclose the risks customers took on when they handed over control of their tokens.
The settlement terms
Kraken agreed to resolve the matter without admitting or denying the SEC’s findings. The company paid $30 million in disgorgement, prejudgment interest, and civil penalties, and it discontinued the staking-as-a-service program for U.S. clients. The settlement did not ban staking itself as a technical activity; it targeted the specific packaged service Kraken sold to retail customers. For the broader regulatory backdrop on how U.S. agencies frame digital assets, the CFTC’s digital assets resources are a useful reference alongside the SEC’s own materials.
Staking versus staking-as-a-service
It helps to separate two things. Staking is a technical process on proof-of-stake blockchains: token holders lock assets to help validate transactions and can earn protocol rewards. Staking-as-a-service is a commercial product in which a company takes custody of customers’ tokens, runs the staking for them, and pays out a return. The SEC’s action was about the second, packaged offering, not the underlying blockchain mechanism. That distinction is why other forms of staking continued while Kraken’s retail U.S. program ended.
Where opinion enters
Reaction to the case was mixed, and reasonable people disagreed. SEC Commissioner Hester Peirce publicly dissented, questioning whether shutting down a retail product was the right outcome and noting that a clear registration path for such offerings was not readily available. Supporters of the action argued it protected retail investors who may not have understood the risks. In the video above, Jake Claver shares his own view of the action. Treat that as his commentary and opinion, and weigh it against the primary record and other perspectives rather than as a statement of law.
Why this matters
The Kraken settlement was an early, concrete example of the SEC applying securities law to a crypto yield product, and it shaped how U.S. platforms approached staking offerings afterward. For anyone using an exchange, the practical takeaway is durable: when you hand custody of your assets to a third party in exchange for a yield, you take on that platform’s risk, and the legal status of the product can change. Reading the primary sources and understanding what you are actually agreeing to matters more than the advertised return.
Common questions
What did the SEC charge Kraken with in February 2023?
The SEC charged that Kraken’s crypto staking-as-a-service program was an unregistered offer and sale of securities, and that Kraken did not adequately disclose the risks customers took on by participating.
How much did Kraken pay, and did it admit wrongdoing?
Kraken paid $30 million in disgorgement, prejudgment interest, and civil penalties, and it settled without admitting or denying the SEC’s findings. It also ended the staking-as-a-service program for U.S. customers.
Did the SEC ban crypto staking?
No. The action targeted Kraken’s specific packaged staking-as-a-service product sold to retail customers, not the underlying technical process of staking on proof-of-stake networks.
Was the action universally supported?
No. SEC Commissioner Hester Peirce dissented, questioning the approach and the lack of a practical registration path, while others viewed the action as appropriate investor protection. Views on the case differ.
This content is educational only. It is not tax, legal, or investment advice. Check primary sources and speak with a qualified professional before making financial decisions.
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