Kraken exchange shut down stacking in the U.S. and will pay a $30 million fine there

Kraken exchange shut down stacking in the U.S. and will pay a $30 million fine there

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Author: Robert Strickland
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Kraken exchange shut down stacking in the U.S. and will pay a $30 million fine there
The crypto platform has agreed to pay a $30 million fine to settle a case of improperly registered investment products

Crypto-exchange Kraken has shut down stacking for U.S. customers at the request of the U.S. Securities and Exchange Commission (SEC). The company said in a blog post that as of February 9, all assets of U.S. customers placed in stacking programs will no longer accrue interest, the funds will be transferred to users' spot wallets.

Ethereum stacking on the platform will be discontinued after an update to the altcoin network called Shanghai, which is expected in March. The delay in the cancellation of stacking with ETH coins is due to the fact that it is technically impossible to withdraw the altcoin from the program before the upcoming update.

According to the analytics platform Dune, Kraken accounts for 7.4% of all Ethereum coins in stacking (1.23 million ETH - $1.9 billion).

As of February 9, Kraken customers from the U.S. will no longer be able to place any assets in stacking, including ETH. For customers outside the U.S., the service will remain unchanged.

The termination of the service for U.S. customers is due to an SEC investigation into Payward Ventures and Payward Trading (operators of the Kraken exchange). The regulator accused them of not properly registering their stacking program as a service, under which investors hand over crypto assets to Kraken for placement with the goal of earning up to 21% per annum.

To settle the SEC charges, the companies agreed to immediately stop stacking for U.S. users and pay a $30 million fine.

Immediately after learning of the settlement with the SEC, the U.S. Internal Revenue Service (IRS) filed a court motion to compel the cryptocurrency exchange Kraken and related companies to disclose customer information, CoinDesk reported. According to court documents, the IRS is trying to identify all U.S. citizens who conducted cryptocurrency transactions from 2016 to 2020 to determine whether they met their tax obligations.

 

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