Expect the SEC to use its Kraken playbook against staking protocols By Cointelegraph

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Expect the SEC to use its Kraken playbook against staking protocols

Published Feb 14, 2023 01:36PM ET Updated Feb 14, 2023 03:20PM ET

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Expect the SEC to use its Kraken playbook against staking protocols

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The United States Securities and Exchange Commission (SEC) settled with Kraken on Feb. 9 for an action taken against the exchange’s staking rewards program. Kraken paid a $30 million fine and agreed to halt the program.

Set aside for a moment the irony that the SEC is going after a solvent firm in the crypto space with a decade-long reputation as a good actor. Kraken has been helping settle verified Bitcoin (BTC) claimants from the hacking of rival exchange Mt. Gox over a decade ago. It invented the use of Merkle Root data to create verifiable proof of reserves. It allowed customers to effectively crowdsource audits of the asset side of the balance sheet by verifying what’s in their account against data on-chain.

J.W. Verret is an associate professor at the George Mason Law School. He is a practicing crypto forensic accountant and also practices securities law at Lawrence Law LLC. He is a member of the Financial Accounting Standards Board’s Advisory Council and a former member of the SEC Investor Advisory Committee. He also leads the Crypto Freedom Lab, a think tank fighting for policy change to preserve freedom and privacy for crypto developers and users.

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