Jesse Powell Kraken Discusses Staking And The SEC Settlement

Key Points:

• Jesse Powell, co-founder and former CEO of Kraken, tweeted about his organization’s choice to stop providing staking services in the United States.
• Powell added that Kraken chose not to take the SEC to court because of “risk-adjusted return,” suggesting that the expense of litigation would not be justified by an unlikely victory.
• Powell also replied to SEC commissioner Hester Peirce, who yesterday criticized her agency for not setting out a compliance path for Kraken and other crypto companies.

Jesse Powell, co-founder and former CEO of Kraken, tweeted about his organization’s choice to stop providing staking services in the United States.

Yesterday, Kraken and the U.S. Securities and Exchange Commission came to an agreement that required Kraken to pay $30 million and stop providing staking services to customers in the United States. According to allegations, Kraken’s staking services were an offering of securities.

Powell made a statement about those incidents today. He stated:

“I honestly hope that somebody proves, in court, that there is a legal, user-friendly version of custodial staking that can be offered to US consumers…It’ll be a brutal, lengthy, expensive fight … but the industry and the USA will be extremely grateful.”

Powell added that Kraken chose not to take the SEC to court because of “risk-adjusted return,” suggesting that the expense of litigation would not be justified by an unlikely victory.

While other businesses might have the means to defend themselves, according to him, the SEC targeted Kraken during a bear market and waited for it to fire 30% of its employees before taking action. They have all of our financial information, added Powell. “Perhaps we appeared frail,”

Powell said so in defense of Paul Grewal, the chief legal officer of the rival exchange Coinbase. Grewal is attempting to describe how Coinbase’s staking service is different from Kraken’s at this time, probably in an effort to avoid potential SEC action.

Powell responds to representatives and senators

Powell also replied to SEC commissioner Hester Peirce, who yesterday criticized her agency for not setting out a compliance path for Kraken and other crypto companies.

He said that “guidance would be appreciated,” writing:

“The ‘This is wrong but I won’t tell you how to do it right. Want to find out if X works? Try it and see what happens.’ approach does not help the industry nor consumers. We aren’t anti-regulation but we need a clear path to operate.”

Powell agreed with statements from Congress member Tom Emmer, a noted pro-crypto legislator who advocated against the SEC’s “purgatory strategy.” Powell wrote:

“Congress must act to protect the domestic crypto industry and US consumers who will now be going offshore to obtain services no longer available in the US.”

Emmer similarly warned of staking-related opportunities moving offshore.

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