The SEC is investigating the activities of the Kraken exchange

Kraken, a cryptocurrency exchange, will cease offering cryptocurrency staking services to customers in the United States and will pay $30 million as part of a settlement with the U.S. Securities and Exchange Commission (SEC) as the regulator expands its crackdown on digital assets.

According to the regulator's statements, Kraken sold "cryptocurrency staking services" to the general public starting from 2019 and positioned its investment scheme as a "user-friendly platform." By April of last year, American investors had invested over $2.7 billion in cryptocurrencies, resulting in Kraken earning approximately $147 million in net income since its launch.

The exchange offered investors "huge profits unrelated to any economic realities," said Gurbir Grewal, Director of SEC Enforcement.

Kraken, which neither admitted nor denied the SEC's allegations, stated that it agreed to discontinue its staking services for clients in the U.S. only. Staking services for clients who are not U.S. citizens will "continue uninterrupted," according to the exchange's statement.

The SEC's announcement followed industry concerns about broader cryptocurrency crackdowns. Brian Armstrong, CEO of the American exchange Coinbase, stated that he believed "getting rid" of staking for retail clients would be a "terrible path for the U.S."

In an earlier statement this week, the SEC declared that new technologies and cryptocurrencies are a priority for the regulator in 2023, describing the sector as creating potential risks for investors and the integrity of U.S. capital markets.

"In various forms, whether through staking as a service, lending, or otherwise, crypto-intermediaries offering investment contracts for investors' tokens must provide proper disclosures and assurances as required by our securities laws," said SEC Chairman Gary Gensler in a prepared statement.