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Kraken was one of the many crypto firms targeted by the Securities and Exchange Commission under former Chair Gary Gensler’s leadership.
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Crypto exchange Kraken has resumed staking services for US clients for the first time in nearly two years. Customers’ ability to stake had been paused since 2023, when the exchange reached a multimillion-dollar settlement with the Securities and Exchange Commission over the services.
Customers in 37 US states will now be able to access staking services for 17 digital assets, including Ether (ETH), SOL (SOL) and Cardano’s ADA (ADA).
Kraken was among the first crypto exchanges to provide staking services to customers, which it began offering in 2019. The exchange agreed to stop providing the services in February 2023 as part of a $30 million settlement with the SEC.
The return of staking services is another signal of the improved regulatory climate under new SEC leadership in the United States.
2023 SEC complaint against Kraken. Source: SEC
Related: Kraken ramps up donations to Ulbricht amid $47M wallet rumors
SEC probes Kraken over alleged securities violations
In February 2023, the SEC launched a probe into Kraken for allegedly violating US securities laws by failing to register its staking service with the government agency.
The SEC argued that Kraken failed to provide proper risk disclosure to staking clients, who relinquish control of their staked tokens to validators to earn rewards.
Former SEC Director of Enforcement Gurbir S. Grewal also accused the exchange of advertising “outsized returns untethered to any economic realities” to clients.
Kraken settled with the SEC several weeks after the probe was announced. However, the SEC sued Kraken in November 2023, alleging that the exchange operated as an unregistered securities broker.
The SEC lawsuit accused Kraken of co-mingling customer funds and fulfilling the role of exchange, broker, dealer and clearing agency without obtaining the proper licensing from government regulators.
Kraken fired back and argued that the SEC did not have the authority to regulate the cryptocurrency markets, as it was not given that authority by the US Congress.
An order from Judge Orrick threw out Kraken’s major questions doctrine defense. Source: Court Listener
On Jan. 24, Judge William Orrick issued an order throwing out Kraken’s defense that the SEC lacked the authority to regulate digital assets.
However, the judge also told Kraken’s legal team that they could raise the issue again at a later stage in the lawsuit.
Magazine: Godzilla vs. Kong: SEC faces fierce battle against crypto’s legal firepower
This article first appeared at Cointelegraph.com News
