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Washington
CNN
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The Securities and Exchange Commission has reached a $30 million settlement with the cryptocurrency platform Kraken that will force it to unwind a program offering investment returns to US users who committed their digital assets to the company.

That practice, known as “staking,” reflected an unregistered offer and sale of securities, the SEC alleged in a complaint announced Thursday. According to the SEC, Kraken failed to adequately disclose the risks of participating in the program, which had advertised annual yields of as much as 21%.

If approved by a court, the settlement marks a potential turning point for cryptocurrency regulation and the SEC’s broader efforts to bring the industry under its jurisdiction. But according to cryptocurrency advocates, the SEC clampdown on staking could have wider effects that undermine the US cryptocurrency ecosystem.

The SEC complaint zeroes in on a practice that the industry says is vital to supporting the healthy function of some virtual currencies. When investors agree to contribute, or stake, their cryptocurrency tokens, their contributions become part of the computerized, technical process used to validate transactions. Those who do may be rewarded with additional tokens.

In its complaint, however, the SEC alleged Kraken failed to notify users about the lack of protections it offered to those who engaged in staking through Kraken’s program. The SEC also said Kraken failed to disclose information about the company’s health, the fees it charged, or how the company would handle its customers’ tokens.

“Investors have had no insight into Defendants’ financial condition and whether Defendants have the means of paying the marketed returns — and indeed, per the Kraken Terms of Service, Defendants retain the right not to pay any investor return,” the complaint said.

Kraken’s program had offered “outsized returns untethered to any economic realities,” said Gurbir Grewal, director of the SEC’s enforcement division, in a statement.

As part of the agreement resolving the charges, Kraken said Thursday in a blog post that on top of the $30 million payment, it would “automatically unstake all U.S. client assets” that were a part of the program and that its US customers would no longer be eligible to participate in staking. Staking and the associated rewards will continue to be offered for non-US customers, the company said.

Kraken is not the only cryptocurrency platform that offers so-called staking-as-a-service. The industry giant Coinbase offers a similar program whose website advertises up to 6% annual returns.

Ahead of the SEC settlement announcement, Coinbase CEO Brian Armstrong had tweeted about “rumors” of a possible crackdown on staking, which he described as a “terrible path for the U.S.” and “a matter of national security” if restrictions on staking wound up driving cryptocurrency development to other countries.

“Staking is a really important innovation in crypto,” Armstrong tweeted. “It allows users to participate directly in running open crypto networks. Staking brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints.”

“Staking is not a security,” he added.

CNN
 — 

Prosecutors in Memphis, Tennessee, will review all cases that involved the five officers charged in the brutal beating death of Tyre Nichols during a traffic stop, the district attorney’s office said, as newly released documents show a sixth officer involved in the encounter lied in his statements to investigators.

“The office will review all prior cases – closed and pending,” Shelby County District Attorney Steven Mulroy said in a statement.

It is unknown how many cases this will involve.

“This is just the beginning,” Erica Williams, the spokeswoman for Mulroy, told CNN. “This involves any criminal case that [the officers] were involved in. It is any case where there were criminal charges that were brought by the DA anytime since they became officers.”

The review comes as police documents detail alleged false statements made by Preston Hemphill following Nichols’ death. Hemphill was fired from the Memphis Police Department last week for violating multiple department policies, including personal conduct and truthfulness. He was the sixth officer to be terminated after Nichols’ death.

In his statement on a form regarding the incident, Hemphill said Nichols attempted to grab his partner’s duty weapon. The statement was part of a decertification letter Memphis Police sent to the Tennessee Peace Officer Standards and Training Commission (POST).

“There is no video footage to corroborate that statement,” the document said, adding that Hemphill then provided a conflicting statement to investigators, telling them he “did not see the subject grab your partner’s gun.”

Hemphill was seen on his body cam video tasing Nichols and later heard saying, “I hope they stomp his ass.” While on top of Nichols, Hemphill “used the assaultive statement, ‘Get on the f**king ground. Finna tase yo ass,’” according to a police document obtained by CNN Thursday.

The January release of video of Nichols, 29, being repeatedly punched and kicked by police shook a nation long accustomed to videos of police brutality – especially against people of color.

Nichols died in a hospital days after the beating.

Earlier this week, letters of decertification for five other officers, who have been charged in Nichols’ death, stated that those officers’ accounts were “not consistent with each other and are not consistent with the publicly known injuries and death of Mr. Nichols,” the documents say.

Hemphill also said in a statement that Nichols was stopped for “driving recklessly at a high rate of speed,” but then acknowledged that he “did not witness the subject driving in such a manner,” the document said.

“You stated that you and your partners stopped the driver and attempted to detain him, and he began to resist,” the decertification letter reads.

“You stated that after he stood up from being on the ground, he started fighting with you and your partner, at which time you deployed your city-issued taser. The video evidence does not corroborate your statement,” it continued.

“Video evidence shows the subject was not resisting but was running away from you while you attempted to tase him,” it said.

Hemphill was given the opportunity to review his version and told investigators that the details were correct, the document said.

“Your statements were inconsistent and untruthful, and you documented false statements,” it added.

If the decertification is granted by the state, it would prohibit Hemphill from working for other state law enforcement agencies.

Lee Gerald, an attorney for Hemphill, said he and his client still disagree with his job termination, but they are cooperating with the investigation.

“Regardless of what the Memphis Police department and the commission decided to do regarding his possible decertification, Mr. Hemphill will continue to cooperate with authorities in the investigation into the death of Tyre Nichols,” Gerald told CNN.

Hemphill has not been criminally charged in the case. The other five terminated officers are due to be arraigned next week on seven counts each, including second-degree murder, aggravated assault, aggravated kidnapping with bodily injury, aggravated kidnapping in possession of a deadly weapon, official misconduct and official oppression, according to the district attorney.

All five officers – Demetrius Haley, Tadarrius Bean, Emmitt Martin III, Justin Smith, and Desmond Mills Jr. – also were internally charged with violating the department’s policies on personal conduct, neglect of duty, excessive or unnecessary force and use of body-worn cameras, according to internal police documents. The charges are not criminal in nature.

Several of the fired officers had received written reprimands or short suspensions for violating policies during their time with the department, personnel files show.

Haley was involved in a November 2021 incident where another officer received a sustained complaint for “excessive/unnecessary force” after a female suspect suffered a dislocated shoulder. Haley didn’t face a departmental charge for force but was reprimanded for failing to document his role in the detention.

Mills received a reprimand in 2019 for not filing a form after the use of physical force against a suspect. Mills used force to take the woman “to the ground so that she could be handcuffed,” according to the summary of his hearing.

While four officers had policy violations, Bean had no written reprimands in the files reviewed by CNN.

Editor’s Note: A version of this story appears in today’s Meanwhile in the Middle East newsletter, CNN’s three-times-a-week look inside the region’s biggest stories. Sign up here.

Abu Dhabi, UAE
CNN
 — 

A devastating earthquake in southern Turkey could change the electoral equation for Turkish strongman President Recep Tayyip Erdogan, who hopes an upcoming election will extend his rule well into a third decade.

While the 68-year-old leader faced the strongest opposition yet to his presidency, the 7.8 magnitude earthquake – which also hit northwest Syria and sent aftershocks across the region – could be a gamechanger for his political career, analysts say.

Erdogan has been visiting impacted areas, consoling victims and pledging to rebuild the thousands of flattened homes. On Tuesday, he announced a state of emergency in the ten hardest-hit provinces of the country’s south, many of which have traditionally supported him and his AK Party.

But there is disgruntlement with the government’s response in those areas, where some people complain that scores of bodies are yet to be collected, causing the stench of death to spread.

“There are no organized relief efforts in here,” Sinan Polat, a 28-year-old car dealer in Hatay province, told CNN. “There are so many bodies in front of the hospitals, there’s not even enough shroud to cover them. Cemeteries are full. What are we going to do, throw the bodies of our families into the sea? It’s not what we expected and hoped. Under these conditions, we’re not hopeful about the future.”

Nuran Okur, a 55-year-old resident of the southern city of Iskenderun, told CNN there was no sign of the state in the city. “It’s been four days, and there’s no one here.”

Erdogan’s response to Monday’s earthquake, which has so far killed more than 22,000 people across Turkey and Syria, may determine the results of an election that is scheduled for May 14.

Erdogan is likely aware of that. On Wednesday he acknowledged “shortcomings” in the government’s early response. The next day, he reminded Turks of government efforts in previous disasters, promising to rebuild homes in less than a year and pledging to support victims with 10,000 liras ($531) each.

“For Erdogan, the next 48 hours will be definitive,” Soner Cagaptay, director of the Turkish Research Program at The Washington Institute for Near East Policy told CNN on Thursday.

Whether his efforts will salvage his chance at re-election is unclear. Most of the quake-stricken provinces in Turkey’s south are socially conservative and are strongholds of Erdogan’s Islamist-rooted AK Party, said Sinan Ulgen, a former Turkish diplomat and chairman of Istanbul-based think-tank EDAM.

“The average AK Party performance in those provinces has been above their national average,” he said, adding that AK Party provinces have generally received more support from the central government, in comparison to opposition-held ones.

The ten provinces that were most affected by the earthquake represent around 15% of Turkey’s population of 85 million and a similar proportion of the 600-seat parliament. During the 2018 vote, Erdogan and the AK Party won the presidential and parliamentary elections, respectively, in all of those provinces but one, Diyarbakir. That region voted for the pro-Kurdish HDP party, and its candidate Selahattin Demirtas, who ran for elections from prison.

One of the strongest to hit the region in more than 100 years, the earthquake has so far killed 19,000 in Turkey alone, where the toll is expected to rise.

Emotions have been running high as many, including those in non-affected provinces, have expressed anger at what they feel was a lack of readiness for the disaster, especially since Turkey is no stranger to earthquakes.

In 1939, an earthquake of the same magnitude as Monday’s killed 30,000 people, and in 1999, a 7.4 magnitude earthquake in the country’s northwest killed more than 17,000 people.

For Turkey’s rulers, quakes have been gamechangers in the past. In what later became a defining moment for Erdogan’s ascension to power, the 1999 quake – and the slow relief efforts that followed – only added to the sense of disillusionment many felt toward the nationalist, secularist state in power at the time, analysts say.

After the 1999 earthquake, the state “collapsed like a house of cards,” Cagaptay told CNN. “And that basically destroyed the ideological hold of the state over society.”

The government has particularly been criticized for its lack of preparedness to minimize damage from such disasters, said Ulgen, especially since the state has since the 1999 earthquake been collecting taxes aimed at sheltering the country from potential future disasters.

The Turkish opposition is already speaking out about the government’s perceived shortcomings in dealing with the tragedy.

Following a nationwide restriction on social media after the earthquake, Kemal Kilicdaroglu, head of the main opposition Republican People’s Party said: “This insane palace government cut off social media communication.”

“As a result, crying for help is less heard,” he tweeted on Wednesday. “We know everything you’re trying to hide.”

While there have been no official announcements to postpone the May 14 elections, some analysts expect Erdogan and the opposition to agree on a later date.

It’s unlikely that conditions in the impacted provinces will allow for the vote to be held, said Ulgen.

“It is going to be a very complicated thing to be able to even orchestrate elections in these provinces,” he said.

With additional reporting by Yusuf Gezer in Iskenderun, Turkey.