Cardano founder thinks Kraken staking service model was security offerings

Charles Hoskinson also responded to the SEC & Kraken case settlement over unregistered securities offerings. 

Charles Hoskinson is the founder of the Cardano blockchain and is also known for his contribution to the Ethereum blockchain as a co-founder. Cardano is a Proof-of-stake (PoS) consensus-based scalable blockchain network, which is known for its stability & fast transaction speed. Through Hydra protocol, Cardano devs aimed to provide scalability of up to 1 million transactions per second.

On 10 Feb 2023, Cardano founder appeared in a new video session on his personal YouTube channel to share his personal opinion on the Kraken vs United States Securities and Exchange Commission (SEC) settlement case. 

Hoskinson said that the SEC fined Kraken because of Kraken’s staking service structure, not for staking services. 

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“It does not appear that there’s any attempt to say ‘oh well, staking mechanics somehow now make the underlying asset a security,” Hoskinson explained.

Further, Hoskinson used a simple example of Gold & Wheat and noted such things may also fall under the category of security if we will put them into a different structure or model case despite these being commodities in nature. 

In the last, Hoskinson talked about his fear that he believes that future government ruling on crypto staking services is unpredictable because there’s a huge chance that they may fail to distinguish the staking system of Cardano (ADA) & Ethereum (ADA) and further push all PoS crypto assets under the same class & same rules. 

SEC, Kraken & Settlement

On 10 Feb 2023, The US Securities regulatory body announced that the agency fined $30 million to settle the case in which SEC found that Kraken was providing crypto staking services as a unregistered securities offering, where it was giving up to 21% returns to the customers. 

Today we charged Kraken with failing to register the offer and sale of their crypto asset staking-as-a-service program, whereby investors transfer crypto assets to Kraken for staking in exchange for advertised annual investment returns of as much as 21 percent.

— U.S. Securities and Exchange Commission (@SECGov) February 9, 2023

Read also: IMF says bitcoin risks ‘have not materialised’ for El Salvador

Cardano founder thinks Kraken staking service model was security offerings

 

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