Kraken

Basics

• Based in: originally NYC, then Wyoming (9-12-2020) and currently San Francisco (9-2-2023).
• Founded in 2011, Kraken was the largest Bitcoin exchange in euro volume and liquidity and is a partner in the first cryptocurrency bank. Kraken lets you buy and sell bitcoins and trade between bitcoins and euros, US Dollars, Canadian Dollars, British Pounds and Japanese Yen. It’s also possible to trade digital currencies other than Bitcoin like Ethereum, Monero, Ethereum Classic, Augur REP tokens, ICONOMI, Zcash, Litecoin, Dogecoin, Ripple and Stellar/Lumens. For more experienced users, Kraken offers margin trading and a host of other trading features.
• Uses technology built by Parity
• Kraken decided to it will delist BSV after consulting their Twitter audience through a poll. The poll was overwhelmingly in favor of delisting the cryptocurrency, and Kraken decided to do so due to “fraudulent claims, escalating to threats and legal action, with the BSV team suing a number of people speaking out against them.”
• From the CoinDesk 50:

"Last year, Kraken brushed past a $4 billion valuation on its way to becoming one of the dominant global exchanges. With its warchest and army of lawyers, including SAFT co-author Marco Santori, the firm is now looking to expand through acquisitions. Emblematic of the coming wave of M&A and consolidation in crypto, Kraken has struck an early lead by striking deals and roping in high-profile talent including Dan Held’s Interchange and David Ripley's Glidera. "Kraken has been remarkably efficient in acquisitions in the past," Santori has said, and now sits poised to open a crypto bank in Wyoming and an office in Dubai."

Audits & Exploits

• Certik got itself in a mess when it claimed to have whitehacked Kraken. It became a back and forth but this is the summary (20-6-2024):

"They did over 30 separate withdrawals from Kraken totalling $3m+ over 5+ days. They dumped assets. They sent and received from instaswappers. They withdrew to XMR and swapped to and from XMR. They used 3 Kraken accounts and a pile of onchain accounts and didn't disclose them. These are NOT whitehats or security researchers. These are cocky motherfucking blackhats who got caught."

• SafeCEX scored it in the Silver tier with 65% (8-12-2022):

"⌛️ 161 days since Proof of Reserves

📎 Announcement 📎 Audit

🔎 Assets included: ADA ADA.S BTC BTC.M DOT DOT.S DOT.P ETH ETH2.S USDC USDT XRP

✅ Merkle tree available and verifiable online

✅ Merkle tree open sourced

✅ Wallet addresses made public

✅ Wallet ownership confirmed by third-party auditor

❌ Wallet ownership not proven publicly by custom message"

Regulation

• SEC allege Kraken operates as an unregistered securities exchange (11-2023).
• The Securities and Exchange Commission announced (9-2-2023) its enforcement action against Kraken, forcing the crypto exchange to shut down its staking service in the U.S. and pay a $30 million fine.
• Kraken is in talks with regulators in several European countries (25-8-2021).
• From The Defiant (16-9-2020):

"The State of Wyoming approved Kraken’s application to become the world’s first Special Purpose Depository Institution (SPDI). The new banking model allows Kraken to maintain custody and transact in both fiat and digital assets."

Pros and Cons

• Pros: Good reputation, decent exchange rates, low transaction fees, minimal deposit fees, feature rich, great user support, secure, supported worldwide.
• Cons: Limited payment methods, not suitable for beginners, unintuitive user interface.

Team, Funding, partners, etc.

Team

• Powell, Jesse; ex-CEO, stepped down (22-9-2022). Succeeding Powell as CEO is the exchange’s Chief Operating Officer Dave Ripley.
• Rapp, Timon
• Nick Gustafson; former staff, now head of trading at Circle
• Pete Rizzo; Editor-at-Large since 15-1-2020 "Will be responsible for driving content related to new products and services as we grow international reach, deepen our suite of innovative products and connect with new crypto users." 
• Aya Miyaguchi; Previously Managing Director
• "Former Kraken employee Jonathan Silverman is suing Kraken for failure to pay after work he performed for the exchange's now closed New York institutional sales and trading desk in 2017; the suit alleges that commission payments for $19M in profits were never paid and that a lump sum settlement of over $900K was never paid either; Silverman is seeking the lump sum in court"
• Michael Gronager; former (9-12-2020) COO, now Chainalysis CEO.
• Mayur Gupta; CMO
• Kraken announced (30-11-2022) that it is cutting roughly 1,100 employees, reducing its headcount by 30%. In a blog post, Kraken founder and outgoing CEO Jesse Powell shared his reasoning behind the most recent wave of layoffs, citing broader economic concerns and a crypto bear market that’s yet to see relief.

Funding

• Silbert, Barry; through Digital Currency Group
• Ver, Roger; first investor
• Blockchain Capital, investor
• Is a sponsor of Coin Center
• Is funding Bitcoin Core. From Decrypt (3-12-2020):

"Gemini today announced the launch of a $200,000 Bitcoin development fund. Called the Gemini Opportunity Fund, $150,000 of the money, in Bitcoin of course, will go straight to Brink, a London non-profit fellowship program to sponsor Bitcoin developers. The developers will work with John Newbery, Brink’s co-founder and executive director, and a Bitcoin Core contributor. Mike Schmidt, another Bitcoin core contributor. Square, the Human Rights Foundation and Kraken are among other donors. Kraken also donated $150,000. So far, the only fellow is Gloria Zhao, a Bitcoin Core contributor fresh from University of California, Berkeley, where she sat as president of its blockchain club."

• From CoinDesk (21-4-2021):

"RIT Capital Partners, formerly known as the Rothschild Investment Trust, has acquired an interest in the Kraken cryptocurrency exchange, according to a note to investors dated April 12. Terms have not been disclosed."

• Messari; Kraken Ventures took part in the $21M funding round (5-8-2021).
• Compound, Kraken, Lido, Synthetix, The Graph, and Uniswap have donated $250,000 each to support Ethereum execution-layer client teams (8-2021).
• Staked got acquired by Kraken (21-12-2021).
• Acala's aUSD Ecosystem Fund; Kraken Ventures is one of the founding funds to grow the Acala stablecoin (23-3-2022)
• Is part of the portfolio of Electric Capital (9-2-2023).

Partners

• Founding member of the Crypto Rating Council (9-2019).
• Kraken's Chief Legal Officer Marco Santori sits on the board of the Blockchain Association (22-9-2020).

Kraken Ventures

Funding

• Alameda turned out to have invested $5M in its fund (8-12-2022).
• Puffer; part of the $18M Series A (16-4-2024).
• From Businesswire (17-12-2021):

"Kraken Ventures, an independent investment fund led by Kraken alumni targeting early stage companies and protocols across the crypto and fintech ecosystem, has today announced the successful closing of its first fund, Kraken Ventures Fund I LP. In addition to Kraken as the anchor LP, the fund raised capital from a broad group of global institutional investors. It raied $65m."