Kraken (crypto exchange)

Main article: Cryptocurrency exchanges

2024: Theft from the exchange of $3 million due to a critical hole

At the end of June 2024, the Kraken cryptocurrency exchange reported that an unnamed fraudster acting as a security researcher on the exchange took advantage of a critical zero-day vulnerability to steal 3m worth of digital assets. dollars Kraken security director Nick Percoco said the fraudster took advantage of an error that "allowed him to artificially inflate his balance on our platform."

The company said it quickly identified fraudulent activity that allowed "under certain circumstances to initiate a deposit on our platform and receive funds into its account without completing the transaction to the end." According to the company's report, the problem arose due to a recent change in the user interface, which allowed customers to use the contributed funds before they were completely cleaned. The company emphasizes that customer assets were not affected in this attack.

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According to company representatives, the problem was resolved within 47 minutes. However, further investigation showed that three accounts, including those belonging to the security researcher, exploited the vulnerability within a few days of each other and withdrew $3 million from the exchange.

The researcher discovered a bug in our funding system and took advantage of it to top up his $4 cryptocurrency account, "Percoco said. - This would be enough to prove an error, send our team a vulnerability detection report and receive a very significant reward in accordance with the terms of our program.

Instead, the specialist revealed this mistake to two other people who fraudulently withdrew a large sum from the company's accounts. Kraken specialists contacted the researcher about the withdrawal of funds, but he refused to return the cryptocurrency.^[1]

2023: Agreement to pay $30 million in proceedings with the SEC for violating crypto asset staking rules

In February 2023, it became known that Kraken would pay $30 million to settle accusations by the US Securities and Exchange Commission that it had violated the rules for handling US securities with its crypto asset staking products and would cease their use as part of an agreement with the regulator.

Also, the regulator forced the platform to stop all products and operations related to staking.

"Today's action should make it clear to the market that staking providers should register, fully disclose and protect investors," SEC Chairman Gary Gensler said in a statement.

2022

Kraken quits Japan

At the end of December 2022, it became known that Kraken will cancel registration with the Financial Services Agency of Japan (JFSA) from January 31, 2023, by which time customers will have to withdraw their fiat and cryptocurrency assets.

Reduction of 30% of employees

In November 2022, it was announced that the Kraken cryptocurrency exchange would cut staff by 30%.

Blocking the accounts of Russians with the right to withdraw funds

The idea of ​ ​ decentralizing the crypt did not pass the sanctions test. In October 2022, Kraken cryptobij introduced restrictions on Russian user accounts due to EU sanctions. Customers can withdraw funds from the exchange account.

US investigation into possible sanctions violations

In July 2022, the Office of Foreign Assets Control of the US Treasury Department (OFAC) is investigating the Kraken crypto exchange. The agency suggests that the platform violated the sanctions regime. One of the largest cryptocurrency platforms is suspected of providing services to users from Iran and other countries for which restrictions have been imposed. Sources told the publication that OFAC could fine the crypto exchange.

According to the NYT, the table indicated that Kraken had 1,522 users with registration in Iran, 149 in Syria and 83 in Cuba. The company also had more than 2.5 million users from the United States and more than 500 thousand from Britain.

The first exchange to receive a full financial license in the UAE

In April 2022, it was announced that cryptocurrency exchange Kraken would open an office in Abu Dhabi, the capital. UAE

Abu Dhabi Global Market (ADGM) has licensed Kraken group to operate a regulated virtual asset exchange platform in a financial-free zone. Kraken is the first global virtual asset exchange group in the United Arab Emirates to receive a full financial license from ADGM.

Refusal to block Russian clients against the background of the special operation of the Russian Federation in Ukraine and accusations against the United States

CEO Kraken February 28, 2022 spoke about the special operation of the Armed Forces of the Russian Federation in Ukraine:

"We cannot freeze the accounts of our Russian customers without the relevant legal requirement. In addition, if we were going to voluntarily freeze the financial accounts of residents of countries that unfairly attack and provoke violence around the world, then the first step would be to freeze all accounts in the United States. From a practical point of view, this is not a completely acceptable option for us to do business^[2] Forces^[3].

2021

Development of a system to use NFT as collateral to obtain loans

In December 2021, the CEO of Kraken announced that the cryptocurrency exchange is working to create an NFT market that may interest customers who want to engage in more than collecting digital art.

The exchange will provide depository services and is considering a system where customers can use their NFTs as collateral to obtain loans, Jesse Powell said.

US $1.25 million fine

In September 2021, Kraken was fined $1.25 million for "allowing US residents to illegally trade in marginal products related to Bitcoin and other cryptocurrencies."

The CFTC found that the Kraken exchange, from about June 2020 to July 2021, allowed transactions that should have been prohibited for American traders, and also worked without the necessary registration as an authorized intermediary in futures transactions (FCM).

The company settled the CFTC claims without acknowledging or denying them. The exchange also said it intends to work with regulators to ensure rules for digital assets create a level playing field for traders around the world.

$30 billion in client funds

• As of March 31, 2021, Kraken holds $30 billion in client funds.
• The volume of spot transactions in 2020 amounted to more than $102.6 billion.
• The average daily turnover in July 2021 is about $769 million, while in September 2020 it totaled $188 million.
• In the first quarter of 2021, Kraken's revenue exceeded $250 million, and it is expected that by the end of the year it will reach more than $1 billion. Then the growth will be 400% year-on-year.

RIT Capital Partners acquired a stake in the exchange

In April 2021, it became known that the RIT Capital Partners investment fund (Rothschild Investment Trust) acquired a stake in the Kraken cryptocurrency exchange.

RIT Capital Partners' interest in Kraken is related to the crypto exchange's plans to become a public company and conduct a direct listing of shares in 2022.

2020

Revenue of $250 million

Kraken's revenue for 2020 is about $250 million, that is, about twice as much as a year ago.

Obtaining a bank license

In September 2020, the Kraken crypto exchange announced that it had received a banking license from the US state of Wyoming. Accordingly, Kraken became the first digital asset company in the United States to receive a bank charter recognized under state and federal law.

The banking license will allow Kraken to create the world's first specialized deposit institution Kraken Financial, which will be regulated like any other bank in the United States.

Kraken Financial will allow its U.S. customers to seamlessly switch between digital assets and national currencies, including the following operations:

• Payment of bills in cryptocurrency;
• Receiving a salary in cryptocurrency;
• Adding digital assets to investment and trading portfolios.

The decision to apply for a bank license in Wyoming was made because of the state's commitment to various innovations, Kraken Financial CEO David Kinicki said.

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