Kraken Lawsuit: The SEC Crypto-Staking Case

The Staking Case

Kraken is one of the largest US cryptocurrency exchanges. In February 2023, it settled charges with the Securities and Exchange Commission over its “staking-as-a-service” program, which let customers lock up certain crypto assets in exchange for advertised returns of up to around 20% a year. The SEC argued this was, in effect, an investment product — an unregistered offer and sale of securities — because customers handed their crypto to Kraken and relied on Kraken’s efforts for a promised yield, without the disclosures securities law requires. Kraken agreed to pay $30 million and to stop offering the staking service to US customers.

The case was an early marker in the fight over whether crypto yield products are securities.

The Broader Case and Its End

Separately, later in 2023 the SEC sued Kraken more broadly, alleging it operated as an unregistered securities exchange. That case, however, took a different turn: amid a significant shift in how the SEC approached crypto, the agency moved to dismiss the broader lawsuit in 2025, dropping it. Kraken subsequently resumed some staking services for US users. So Kraken’s legal story is mixed — a paid settlement that ended one product, followed by the government walking away from the larger exchange case.

It reflects how unsettled and shifting crypto regulation has been.

What Users Should Know

For crypto users, the key takeaway is that ‘staking’ and yield programs are not risk-free savings accounts: returns are not guaranteed, the rules governing them have been in flux, and the assets are generally uninsured. If you use such a product, understand exactly how it works, who controls your assets while they are locked up, and what happens if the platform fails. Regulation here can change quickly.